Reserve Bank of India (RBI) will conduct a special audit for regulatory violations of the IIFL Finance Ltd and JM Financial Products Ltd (JMFPL) as it has initiated the process for appointment of auditors.
The central bank has issued two separate tenders for appointment of auditors for special audits of the two non-banking finance companies (NBFCs).
According to the tender document, audit firms brought together by the Securities and Exchange Board of India (Sebi) for forensic audit can participate in the bidding process. The last date for submission of bids is April 8 and the selected companies will receive work on April 12, 2024.
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Earlier in March, the RBI had barred the IIFL Finance and JM Financial Products for non-compliance of regulatory guidelines.
It barred IIFL Finance from sanctioning or disbursing gold loans after certain material control concerns were observed in its gold loan portfolio.
The RBI said it has conducted an inspection of the company in relation to the financial position of IIFL as on March 31, 2023.
“Certain material control concerns were observed in the company’s gold loan portfolio, including major deviations in testing and certification of purity and net weight of the gold during sanction of loans and during auction after default,” the RBI had. said
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A day later, the RBI imposed restrictions on JM Financial Products after finding that the firm had indulged in various manipulations, including repeatedly helping a group of its own clients bid for various IPOs using loaned funds.
The central bank has banned the NBFC from providing any type of financing against shares and debentures, including sanctioning and disbursing loans against initial public offering (IPO) of shares and subscription to debentures.
The actions were “necessitated due to certain serious deficiencies observed in relation to loans sanctioned by the company for IPO financing as well as NCD (non-convertible debentures) subscriptions”, the RBI said.
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Published: 24 Mar 2024, 16:26 IST