IIFL Finance names a corrective action team following the RBI audit

The Reserve Bank of India (RBI) was alerted to major anomalies in IIFL Finance’s gold loan portfolio. The RBI added that the company has taken the appropriate steps to resolve the issues and stop them from happening again.

According to a statement from IIFL Finance, the company has assembled a team to carry out corrective measures and update rules and processes.

In early March, the RBI ordered IIFL Finance to stop approving and disbursing new gold loans, citing “material supervisory concerns” about discrepancies in the assaying and certification of gold purity and weight. A special audit by an independent agency began on April 23, 2024, and has since concluded.

Despite the embargo on new gold loans, IIFL Finance continued servicing its existing portfolio and other business operations. To mitigate risks, the company raised Rs 1271.3 crore through rights issues and secured Rs 500 crore via non-convertible debentures from long-term investors. They also implemented cost-control measures to ensure projected cash flows over the next three years would meet financial obligations and maintain strong capital adequacy.