The Reserve Bank of India (RBI) has identified irregular practices at select gold financiers, directing them to review their processes, identify lapses, and implement remedial measures within three months. Failure to comply could result in supervisory action, according to a report by Jefferies.
The RBI’s concerns particularly pertain to gold loans sourced through fintech platforms, a sector recently under scrutiny. Media reports suggest that issues flagged by the RBI have raised alarm within the industry.
Jefferies noted that while tighter regulatory processes may slow growth for some gold financiers, large non-banking financial companies (NBFCs) like Muthoot Finance and Manappuram Finance (MGFL) are likely to be better positioned due to their periodic audits by the RBI. IIFL Finance is also expected to remain unaffected, having already taken corrective measures. It has been allowed to resume its gold loan business after passing an RBI audit.
This development could lead to a more cautious approach in the gold loan sector, especially among smaller and fintech-associated players, while the larger, regularly audited players may face less disruption.
