Regulatory Priorities and Redressal: FIDC Issues Advisory to Member Firms

In light of recent regulatory actions taken against major finance firms, the Finance Industry Development Council (FIDC) has issued a directive to its member firms, urging them to place the highest importance on addressing concerns and observations from regulators. The FIDC has emphasised the need for prompt and appropriate action within the stipulated timeframe.

The industry lobby group communicated its stance in a letter to member firms, stressing the equal significance of keeping the regulator abreast of the remedial measures being undertaken to resolve their concerns when necessary.

The Reserve Bank of India (RBI) recently imposed restrictions on IIFL Finance, prohibiting the company from approving and disbursing new gold loans due to supervisory concerns. Furthermore, JM Financial Products was directed to halt all forms of financing against shares and debentures as a result of identified deficiencies in their processes. This ultimately culminated in a prohibition on the sanction and disbursement of loans against Initial Public Offerings (IPOs) of shares, as well as against the subscription to debentures.

The FIDC stressed the critical importance of unwavering compliance with all applicable laws and regulations at all times. Specifically, the organisation highlighted the imperative nature of adhering to norms related to Know Your Customer (KYC) and Anti Money Laundering (AML) processes. The FIDC emphasised that any loophole in internal processes could potentially compromise India’s internal security and economic interests. The organisation firmly asserted that there should be no shortcuts or attempts to circumvent these crucial norms under any circumstances.

This advisory comes in the wake of recent regulatory actions undertaken by the RBI and other regulatory bodies against several large entities with substantial business operations. The primary objective behind these measures is to underscore the utmost significance of stringent compliance and governance standards.

The FIDC concluded its advisory by reiterating the resounding message sent by these regulatory actions: that business must be conducted in strict accordance with acceptable standards and in full compliance with the laws of the land. The organisation has therefore placed great emphasis on the imperative nature of prioritising regulatory concerns and effectively addressing them in a timely manner.