MUMBAI: The Reserve Bank on Monday barred IIFL Finance Ltd from disbursing gold loans, with immediate effect following multiple supervisory concerns, including serious deviations in assaying and certifying the purity of the yellow metal.

A leading financial services provider, IIFL Finance offers a range of loans and mortgages. The latest directions from the RBI pertain to only the gold loan business.

In a statement, the RBI said it has directed IIFL Finance Ltd “to cease and desist, with immediate effect, from sanctioning or disbursing gold loans or assigning/ securitising/ selling any of its gold loans”.

The company can, however, continue to service its existing gold loan portfolio through the usual collection and recovery processes, it added.

The 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 the central bank. Giving details, it said an inspection of the company was carried out by it with reference to its financial position as of March 31, 2023.

Certain material supervisory concerns were observed in the gold loan portfolio of the company. The concerns include serious deviations in assaying and certifying purity and net weight of the gold at the time of sanction of loans.