IIFL Finance hits lower limit after RBI bars it from sanctioning, disbursing new gold loans

IIFL Finance is currently trading at its lower limit of Rs. 478.50, down by 119.60 points or 20.00% from its previous closing of Rs. 598.10 on the BSE.

The scrip opened at Rs. 478.50 and has touched a high and low of Rs. 478.50 and Rs. 478.50 respectively. So far 56701 shares were traded on the counter.

The BSE group 'A' stock of face value Rs. 2 has touched a 52 week high of Rs. 704.20 on 16-Oct-2023 and a 52 week low of Rs. 408.40 on 14-Mar-2023.

Last one week high and low of the scrip stood at Rs. 633.95 and Rs. 478.50 respectively. The current market cap of the company is Rs. 18253.97 crore.

The promoters holding in the company stood at 24.79%, while Institutions and Non-Institutions held 39.54% and 35.67% respectively.

The Reserve Bank of India (RBI) has directed IIFL Finance to cease and desist, with immediate effect, from sanctioning or disbursing gold loans or assigning/ securitising/ selling any of its gold loans. The company can, however, continue to service its existing gold loan portfolio through usual collection and recovery processes.

An inspection of the company was carried out by the Reserve Bank with reference to its financial position as on March 31, 2023. Certain material supervisory concerns were observed in the gold loan portfolio of the company, including serious deviations in assaying and certifying purity and net weight of the gold at the time of sanction of loans and at the time of auction upon default; breaches in Loan-to-Value ratio; significant disbursal and collection of loan amount in cash far in excess of the statutory limit; non-adherence to the standard auction process; and lack of transparency in charges being levied to customer accounts, etc. These practices, apart from being regulatory violations, also significantly and adversely impact the interest of the customers. Over the last few months, the RBI has been engaging with the senior management and the statutory auditors of the company on these deficiencies; however, no meaningful corrective action has been evidenced so far. This has necessitated the imposition of business restrictions with immediate effect, in the overall interest of customers.

These supervisory restrictions will be reviewed upon completion of a special audit to be instituted by the RBI and after rectification by the company of the special audit findings and the findings of RBI Inspection, to the satisfaction of RBI. This business restriction is without prejudice to any other Regulatory or Supervisory action, that may be initiated by the RBI against the company.

IIFL Finance is an Indian diversified financial services company.