RBI lifts ban on IIFL Finance gold loan business

The company, through an exchange filing dated September 19, 2024, stated that the restrictions imposed on the company's gold loan business have been lifted. The restrictions, imposed on March 4, 2024, prohibited the company from sanctioning, disbursing, or assigning/securitising/selling any of its gold loans.

The RBI's decision is effective immediately and allows the company to resume the sanctioning, disbursal, assignment, securitisation, and sale of gold loans in compliance with all relevant laws and regulations.

In the Q1FY25 results, the company witnessed a major impact on the gold loan business, which declined to ₹14,727 crore, down 33% YoY and 37% QoQ. The overall gold loan AUM decreased from ₹26,081 crore on March 4, 2024, to ₹12,162 crore on August 5, 2024. The restriction on the gold loan business impacted the company’s overall AUM, which grew at a modest rate of 2% YoY and declined by 12% QoQ to ₹69,610 crore.

Commenting on the impact of the RBI embargo on the June quarter results, Mr. Kapish Jain, President & Group Chief Financial Officer, said, “Our financial performance for the current quarter is hugely impacted by the ongoing embargo on our gold loan business, with AUM in the gold business dropping by near 37% QoQ. During this period, both the material subsidiaries have reported healthy performance in terms of growth and profitability.”

A recent media report also suggested a rating downgrade was imminent if the RBI ban was not lifted sooner. The shares of IIFL Finance closed nearly 6% lower at ₹497 apiece on the NSE on Thursday. The stock has fallen 13% on a YTD basis from January 1, 2024 to September 19, 2024.