T The Reserve Bank of India (RBI) has asked non-banking financial companies (NBFCs) to strictly comply with norms regarding loan-to-value ratio, auction processes, and cash disbursement after discovering that some of these companies violated regulatory guidelines.
According to sources, the regulator assessed the gold loan business of NBFCs after one of them, IIFL Finance, faced regulatory restrictions for violating norms.
The gold finance companies' business recorded phenomenal growth since the pandemic, jumping from ₹34,678 crore in March 2020 to 1.31 trillion in March 2023, according to RBI data.
Last week, in a communication to gold loan NBFCs, the regulator instructed them not to disburse more than ₹20,000 in cash, citing provisions of the Income-Tax Act.
One concern was related to higher cash disbursements than the norms stipulate.
This story is from the May 16, 2024 edition of Business Standard.
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This story is from the May 16, 2024 edition of Business Standard.
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