“We want to inform you that the RBI, by its communication dated September 19, 2024, has lifted the restrictions imposed on the gold mortgage enterprise of IIFL Finance. These restrictions had been earlier imposed on March 4, 2024, which prohibited the Firm from sanctioning, disbursing, or assigning/securitising/promoting any of its gold loans,” IIFL Finance stated in an change discover.
The RBI had taken motion towards IIFL Finance on account of “critical deviations” in assaying and certifying purity and internet weight of the gold whereas sanctioning loans, and on the time of public sale upon default. The regulator discovered breaches in loan-to-value (LTV) ratio set in gold mortgage, and located that the NBFC was disbursing and assortment vital quantity by way of money.
Following the RBI order, the non-bank lender made key systemic adjustments in its working processes, sources stated, and fully restricted money disbursements of greater than ₹20,000 in gold loans. It additionally created inside mechanism to make sure gold mortgage LTV stays beneath 75 per cent.
Through the course of ban, IIFL Finance’s gold mortgage enterprise was impacted considerably. Its gold mortgage e-book decreased from ₹26,081 crore as on March 4 to ₹12,162 crore as on August 5. Over a million prospects closed their accounts and reclaimed their jewelry. Over half of mortgage belongings had been liquidated, funds had been repaid to banks and jewelry was returned to prospects, in accordance with its Q1FY25 investor presentation.
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