The Reserve Bank of India on Monday asked IIFL Finance to stop sanctioning and disbursing gold loans with immediate effect owing to material supervisory concerns in the gold loan portfolio of the company. RBI said these lapses impact the interest of customers.The RBI carried out an inspection of the company regarding its financial position as on March 31, 2023.During this inspection, it found material concerns, including serious deviations in assaying and certifying purity and net weight of the gold at the time of sanction of loans and at the time of auction upon default.The regulator also found breaches in the Loan-to-Value ratio, significant disbursal and collection of loan amounts in cash far in excess of the statutory limit.Further, non-adherence to the standard auction process was also found. RBI saw a lack of transparency in charges being levied to customer accounts, among other reasons.IIFL Finance can continue servicing its existing gold loan portfolio through usual collection and recovery processes, the RBI said.“These practices, apart from being regulatory violations, also significantly and adversely impact the interest of the customers,” RBI said in its statement.The regulator said it has been engaging with senior management and statutory auditors of IIFL Finance to discuss these deficiencies. “No meaningful corrective action has been evidenced so far. This has necessitated the imposition of business restrictions with immediate effect, in the overall interest of customers,” RBI said.”These supervisory restrictions will be reviewed upon completion of a special audit to be instituted by the RBI and after rectification by the company of the special audit findings and the findings of RBI Inspection, to the satisfaction of RBI,” the central bank said in a statement.(You can now subscribe to our Economic Times WhatsApp channel)(You can now subscribe to our Economic Times WhatsApp channel)Investment IdeasStock Report PlusePaperWealth EditionView all Stories