IIFL Finance shares at lower circuit
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New Delhi: 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.
