RBI removed restriction on gold loan business of IIFL Finance

Current Context: The Reserve Bank of India (RBI) has lifted the restrictions on IIFL Finance’s gold loan business, effective immediately.

• These restrictions were initially imposed in March 2024 due to significant operational lapses, including discrepancies in the assaying and certification of gold purity and net weight at the time loans were sanctioned.
• With the removal of these restrictions, IIFL Finance can now resume all activities related to gold loans, including sanctioning, disbursal, assignment, securitisation, and sale, while adhering to all relevant laws and regulations.
• The company has committed to maintaining high standards of compliance and customer service.

Question:

1 What was the primary reason for the RBI's decision to impose restrictions on IIFL Finance's gold loan business?

• A) Excessive lending rates offered by IIFL Finance
• B) Lack of customer satisfaction with IIFL Finance's services
• C) Financial irregularities in IIFL Finance's other operations
• D) Operational lapses in the gold loan process

Answer: D) These restrictions were initially imposed in March 2024 due to significant operational lapses, including discrepancies in the assaying and certification of gold purity and net weight at the time loans were sanctioned.