RBI Initiates Special Audit For IIFL Finance, JM Financial Products

The Reserve Bank of India (RBI) has taken decisive action against IIFL Finance Ltd and JM Financial Products Ltd (JMFPL) by initiating a special audit to investigate regulatory breaches within these financial entities. 

In response to observed non-compliance with regulatory guidelines, the RBI has floated separate tenders for the appointment of auditors to conduct the special audit. According to the tender documents published by the RBI, audit firms empanelled by the Securities and Exchange Board of India (Sebi) for forensic audit are eligible to participate in the tendering process. The deadline for submission of bids has been set for 8 April, with the selected firms to be announced on 12 April.

Earlier this month, the RBI imposed restrictions on IIFL Finance, prohibiting the sanctioning or disbursing of gold loans due to significant concerns identified within its gold loan portfolio. These concerns included serious deviations in the assaying and certification of the purity and net weight of gold at the time of loan sanction and auction upon default. The RBI highlighted that such practices not only violated regulatory standards but also had adverse effects on customer interests.

Similarly, JM Financial Products Ltd faced regulatory action from the RBI after investigations revealed various manipulative practices. These included allegations of assisting a group of its own customers in bidding for multiple Initial Public Offerings (IPOs) using loaned funds.