Reserve Bank of India | Image:PTI
RBI’s special audit: The Reserve Bank of India (RBI) has taken decisive action against IIFL Finance Ltd and JM Financial Products Ltd (JMFPL) by initiating special audits to investigate their regulatory breaches. In a bid to uphold compliance standards in the non-banking finance sector, the RBI has launched the process for appointing auditors to conduct thorough examinations of these companies.
To facilitate this process, the RBI has issued two separate tenders for the appointment of auditors for special audits of IIFL Finance and JM Financial Products. The tender documents specify that audit firms empanelled by the Securities and Exchange Board of India (SEBI) for forensic audits are eligible to participate in the bidding process. Interested firms have until April 8 to submit their bids, with the selected auditors slated to commence work on April 12, 2024, according to the bid documents.
The regulatory crackdown comes in the wake of recent actions taken by the RBI against IIFL Finance and JM Financial Products for non-compliance with regulatory guidelines. IIFL Finance faced sanctions from the RBI, prohibiting the company from sanctioning or disbursing gold loans due to material supervisory concerns identified in its gold loan portfolio. The RBI’s inspection revealed serious deviations in the assaying and certification of gold purity and net weight, raising concerns about regulatory violations that could adversely impact customer interests.
Similarly, JM Financial Products found itself under RBI lens for engaging in various manipulations, including assisting its customers in bidding for IPOs using loaned funds. In response, the RBI imposed restrictions on JM Financial Products, barring the company from providing any financing against shares and debentures, including loans against IPO shares and subscriptions to debentures.
In a statement addressing the actions taken against JM Financial Products, the RBI cited “serious deficiencies observed in respect of loans sanctioned by the company for IPO financing as well as NCD subscriptions” as the driving force behind the regulatory intervention.
(With PTI inputs)
