IIFL Finance shares at lower circuit of 20 pc after RBI order on gold loans

New Delhi, March 5 (IANS): The RBI in its order dated March 4 has directed IIFL Finance to stop sanctioning or disbursing gold loans, with immediate effect including ban on any assignment/securitisation/down-selling transactions.

“We believe this is a major negative setback for IIFL as gold loans constitute 32 per cent of its AUM mix and a large proportion of co-lending done by the company was in the gold loan segment. Since these are process-related lapses, the company can work with the regulator to rectify its observations in the gold loan portfolio,” Motilal Oswal Financial Services said in a report.

Given that there is little clarity on the duration for which this ban could remain in effect, it is difficult to quantify the impact of this ban on IIFL’s AUM growth and profitability, it said.

IIFL Finance shares hit the lower circuit of 20 per cent on Tuesday following the RBI order. The shares are trading at Rs 478.50, down 20 per cent.

The RBI also shared the findings of an inspection that it carried out into the company’s financial position as of March 2023. The regulator found certain material supervisory concerns in IIFL’s gold loan portfolio, including serious deviations in gold appraisal and certification of purity and net weight of gold at the time of sanctioning of gold loans and at the time of auction upon default, Motilal Oswal Financial Services said.



Top Stories

Leave a Comment

Title: IIFL Finance shares at lower circuit of 20 pc after RBI order on gold loans

You have 2000 characters left.


Please write your correct name and email address. Kindly do not post any personal, abusive, defamatory, infringing, obscene, indecent, discriminatory or unlawful or similar comments. Daijiworld.com will not be responsible for any defamatory message posted under this article.

Please note that sending false messages to insult, defame, intimidate, mislead or deceive people or to intentionally cause public disorder is punishable under law. It is obligatory on Daijiworld to provide the IP address and other details of senders of such comments, to the authority concerned upon request.

Hence, sending offensive comments using daijiworld will be purely at your own risk, and in no way will Daijiworld.com be held responsible.