Chairperson — NDTV Profit Exclusive

IIFL Finance Ltd. has determined to discontinue its top-up loans with rapid impact, Chairperson Arun Kumar Purwar, days after the RBI barred non-bank lender from disbursing gold loans.

“We now have, in fact, given loans on prime of loans that aren’t towards gold ornaments, however clear loans,” Purwar informed NDTV Revenue’s Sajeet Manghat on Wednesday in an unique interview. The overall top-up loans make up 0.03% of the portfolio, he stated.

The RBI barred IIFL Finance on Monday from sanctioning and disbursing gold loans with rapid impact. It has additionally been barred from assigning, securitising and promoting any of its gold loans. The corporate can proceed servicing its present loans.

Purwar admitted that sure issues inside the firm existed whereas distributing gold loans, which account for 30% of its portfolio. As the interior auditors are conservative in strategy, there’s been a distinction within the worth when a mortgage is given versus when the gold is put to public sale, in accordance with Purwar.

“We’re addressing this challenge,” he stated. “The corporate has a powerful and sound audit course of involving inner and exterior audits, and as so whole portfolio will get audited comprehensively.”

The RBI crackdown has had a big influence on the enterprise despite the fact that the corporate follows trade requirements, the chairperson stated. “We now have been following trade follow and have nearly 3,000 branches via which we disburse gold loans all through the nation.”

“We now have amended our insurance policies to fulfill RBI’s necessities,” he stated, including that the corporate is in steady dialogue with its banking companions to point out to them that its enterprise is sound.

Whereas gold loans account for 30% of the corporate’s whole portfolio, these are largely short-term loans, Purwar stated. “Most of our gold-loan shoppers are from lower-income households, and (it) is a enterprise which we do very efficiently.”

Purwar is hopeful that IIFL Finance can restart its gold mortgage enterprise sooner than 9 months. “I personally imagine that it’s attainable if we work arduous to point out to RBI our compliance.”