IIFL Finance Ltd and JM Financial Products Ltd have been subjected to a special audit by the Reserve Bank of India (RBI) to further probe their regulatory breaches. The RBI has released separate tenders for the appointment of auditors to conduct the audit. Audit firms registered with the Securities and Exchange Board of India for forensic audit are eligible to participate in the tendering process. The submission deadline for bids is April 8, and the selected firms will be awarded work on April 12.
The regulatory actions by the RBI come after both companies were found to have violated regulatory guidelines. IIFL Finance was barred from sanctioning or disbursing gold loans due to supervisory concerns related to its gold loan portfolio. The RBI observed serious deviations in the certifying purity and net weight of gold during the sanctioning and auction phases of the loans. These violations not only breach regulations but also significantly impact the interests of customers.
Similarly, JM Financial Products Ltd faced restrictions from the RBI for engaging in manipulative practices. The company was found to have assisted a group of its own customers in bidding for various IPOs using loaned funds. Such actions are considered manipulations and are in violation of regulatory standards.
To address these issues, the RBI has decided to conduct a special audit for a comprehensive investigation into the regulatory breaches. The audit aims to identify the extent of the violations, assess the impact on stakeholders, and recommend appropriate actions to prevent future occurrences.
The RBI’s decision to conduct a special audit underscores its commitment to maintaining the integrity and stability of the financial sector in India. By proactively addressing regulatory breaches, the RBI aims to ensure that companies adhere to the prescribed guidelines and safeguard the interests of customers. The audit process will provide valuable insights into the shortcomings of IIFL Finance and JM Financial Products Ltd’s operations and serve as a deterrent for similar fraudulent activities in the future.
The appointment of auditors through a tendering process ensures transparency and fairness in the selection process. Empanelled audit firms registered with the Securities and Exchange Board of India for forensic audit are eligible to participate in the tender. The RBI’s objective is to choose auditors with expertise in forensic audit to conduct a thorough investigation into the regulatory breaches.
Overall, the special audit initiated by the RBI highlights the importance of regulatory compliance and the consequences of non-compliance in the financial industry. It serves as a warning to other financial institutions to adhere to the rules and regulations governing their operations and to prioritize the interests of their customers.
Read More:
