Updated March 6th, 2024 at 12:30 IST

IIFL Finance secures $200 million liquidity support from Fairfax following RBI ban

RBI prohibited IIFL Finance from disbursing gold loans due to "material supervisory concerns" identified in its gold loan portfolio.

Reported by: Business Desk
IIFL Finance Fairfax India | Image:Republic
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IIFL Finance-Fairfax: IIFL Finance announced on Wednesday, March 6, 2024, a significant development in response to recent regulatory actions. The company's top shareholder, Fairfax India, has committed to providing up to $200 million in liquidity support, reassuring stakeholders amid liquidity concerns following a directive from the Reserve Bank of India (RBI).

The move comes shortly after the RBI imposed restrictions on IIFL Finance, prohibiting the disbursement of gold loans due to "material supervisory concerns" identified in its gold loan portfolio. This directive, issued on Monday, triggered apprehensions among investors and lenders regarding the company's liquidity position.

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"We have been long-term investors in the IIFL group of companies and have full trust and confidence in the company's strong management team led by Nirmal Jain and R Venkataraman," stated Prem Watsa, chairman of Fairfax India, stressing the firm's enduring commitment to IIFL Finance. Fairfax India holds approximately a 15 per cent stake in IIFL Finance.

Shares of IIFL Finance have experienced a significant downturn, plummeting by approximately 36 per cent following the RBI's directive. On Wednesday, the stock witnessed a further decline of 20 per cent, reaching the lower end of an exchange-imposed trading band.

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"We are committed to complying fully with RBI's directives and growing the business under the regulator's guidance," said Nirmal Jain, managing director and founder of IIFL Finance.

(With Reuters inputs.)

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Published March 6th, 2024 at 12:30 IST