Reserve Bank of India imposes Rs 3.10 lakh penalty on IIFL Finance Limited

In a press release issued on Friday, RBI said the penalty was imposed through an order dated May 11, 2026, under provisions of the Reserve Bank of India Act, 1934.

"The company had failed to pay the surplus amount realised from the auction of pledged gold articles, over and above the loan outstanding, to certain borrowers," RBI said in the release.

The central bank said the action relates to non-compliance with provisions of the 'Master Direction- Reserve Bank of India (Non-Banking Financial Company - Scale Based Regulation) Directions, 2023'.

Gold loans are loans given against pledged gold jewellery or articles. If a borrower fails to repay the loan, lenders can auction the pledged gold to recover dues. Under RBI norms, any amount recovered through the auction over and above the outstanding loan amount is required to be returned to the borrower.

According to the RBI, the penalty follows a statutory inspection of the company conducted with reference to its financial position as on March 31, 2025.

"Based on the supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed," the central bank said.

RBI said it considered the company's reply to the notice as well as oral submissions made during a personal hearing before deciding to impose the penalty.

The central bank also clarified that the action was based on "deficiencies in regulatory compliance" and does not affect the validity of transactions or agreements entered into by the company with its customers.

"Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the company," the release added. (ANI)