New Delhi, March 6 (IANS) The Reserve Bank of India (RBI) recently imposed embargoes on IIFL’s gold loan business and JM Financial Products’ loan against shares & IPO financing business due to regulatory non-compliance and governance issues, as per Emkay Global Financial Services.
According to Emkay Global Financial Services, the RBI’s actions signal zero tolerance for non-compliance and mis-governance, impacting systemic growth for NBFCs in the near term but aiming to enhance stakeholder confidence in the long run.
V K Vijayakumar of Geojit Financial Services notes a weakened sentiment in the NBFC sector following RBI’s restrictions on IIFL Finance and JM Financial, leading to stock price declines across the sector.
Motilal Oswal Financial Services expects challenges for IIFL Finance in working with the regulator to review and revoke the ban on gold lending, potentially taking around six months to rectify observations to the RBI’s satisfaction.
Responding to the RBI, JM Financial stated that there were no material deficiencies in their loan sanctioning process and no violation of regulations. Discussions around regulatory compliance and governance continue in the financial sector.
