RBI conducts special audit of IIFL Finance and JM Financial for regulatory violations.A tender was floated to appoint an auditor.

https://www.livemint.com/brand-stories/iifl-finance-announces-additions-to-the-board-and-enhancement-in-senior-management-team-11710508914332.html Reserve Bank of India (RBI) , has started the process of appointing an auditor and will conduct a special audit into regulatory violations by IIFL Finance Ltd and JM Financial Products Ltd (JMFPL).

The central bank has announced two separate tenders for appointment of auditors for special audit of two non-banking financial companies (NBFCs).

According to the bidding documents, an audit firm authorized by the Securities and Exchange Board of India (Sebi) to conduct a forensic audit can participate in the bidding process. The last date for submitting bids is April 8th and the selected companies will be awarded the jobs on April 12th, 2024.

Please also read: Why are RBI and Sebi scared of JM Financial Products?

Earlier in March, the RBI had restricted trading in IIFL Finance and JM Financial Products citing violation of regulatory guidelines.

IIFL Finance had been prohibited from sanctioning or disbursing gold loans as serious supervisory concerns were identified in the gold loan portfolio.

RBI had announced that an inspection was conducted on IIFL by referring to its financial position as of March 31, 2023.

“Certain significant supervisory concerns were observed in the company’s gold loan portfolio, including significant deviations in the testing and certification of gold purity and net weight at the time of loan sanctioning and auction in the event of default.” said the central bank. Said.

Please also read: IIFL Finance announces board expansion and strengthening of senior management team

A day later, the RBI had found that JM Financial Products had indulged in various manipulations, including repeatedly helping its own client groups bid in various IPOs using loan funds. Regulations were imposed on JM Financial Products.

The central bank had prohibited NBFCs from providing any kind of financing for stocks or debentures, including sanctioning or disbursing loans for initial public offering (IPO) of stocks or underwriting debentures.

The action was “necessary due to the identification of certain material deficiencies in the underwriting of loans and NCDs (non-convertible debentures) sanctioned by the company for IPO financing,” the RBI said.