RBI asks for info on gold loan frauds
The Reserve Bank of India has asked banks to share info on gold loan frauds and review lending processes after employees manipulated the system. A whistle-blower complaint revealed collusion with customers, manipulated repayments, and liens. RBI banned IIFL Finance from new gold loans. No response from RBI.
Mumbai: The Reserve Bank of India has asked to share with it on frauds reported in , actions taken by them to recover the money and in the , said people with knowledge of the matter.The also asked banks to review their lending processes to check if they are in compliance with the regulator's gold loan guidelines. The RBI sought this information after it found that employees of two state-run banks manipulated its system to meet gold loan targets, they said.
"The RBI can access information on the Central Repository of Information on Large Credit (Crilc) for loans above ₹5 crore and Credit Information Bureau India (Cibil) for small-ticket loans," said a senior bank official. "However, it sought information from banks to understand the nature of frauds which is not captured under Crilc and Cibil, and to sensitise lenders," he added.
The RBI did not respond to ET's request for comment.
"The regulator initially received a whistle-blower complaint that said employees of some banks had collaborated with friendly customers and given them collateral-free gold loans. Later, the money was credited back to the bank as repayment, creating a lien against it," said another banker aware of the whistle-blower's complaint.
Further, the complainant said the branch paid the processing fee from its expense account, while interest payment was avoided by manipulating the system to backdate repayments.
The RBI sent the letter to banks around the time it banned IIFL Finance (on March 4) from giving new gold loans.
