Updated March 5th, 2024 at 10:03 IST

IIFL Finance plummets as RBI restricts gold loan offerings

Brokerage firm Jefferies warned of potential impacts on earnings, co-lending income, and increased finance costs due to prolonged restrictions.

Reported by: Business Desk
IIFL Finance plunges | Image:Unsplash
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IIFL Finance plunges: IIFL Finance shares plummeted 20 per cent, hitting the lower circuit limit mandated by the exchange, following the Reserve Bank of India's (RBI) decision to prohibit the company from offering gold loans. 

The RBI cited "material supervisory concerns" within the company's portfolio, noting major deviations in collateral assessment and breaches in the maximum loan-to-value ratio.

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The central bank also observed that IIFL Finance had disbursed loans and utilised cash collections beyond permissible limits, coupled with a lack of transparency in customer charges. 

Jefferies, a brokerage firm, warned of potential impacts on earnings, co-lending income, and increased finance costs due to prolonged restrictions.

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In response, IIFL Finance acknowledged the RBI's concerns during a conference call with analysts and investors, highlighting ongoing corrective measures. 

The company stressed that the financial impact would hinge on the duration of the resolution process.

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(With Reuters Inputs)

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Published March 5th, 2024 at 09:44 IST