IIFL Finance tanks 20% on RBI ban!

The ban

IIFL Finance, one of the top two NBFCs in the goal loan space, fell 20% in value as RBI banned it from issuing fresh gold loans. Swipe to know why.

RBI's observation

The ban was imposed to protect customer interests after RBI noticed discrepancies in the purity certification and net weight of gold used as collateral.

Other lapses

The regulator also found breaches in the maximum allowed loan-to-value ratio. The lender has also allegedly extended cash loans beyond the statutory limit (cont.)

Other lapses

RBI further added that the NBFC has failed to adhere to standard auction processes and lacks transparency in customer charges.

The silver lining

The regulator has allowed the lender to service its existing gold loan portfolio through the usual collections and recovery process, which accounts for 32% of its total loan book.

Path ahead

The RBI has instituted a special audit. Post audit, the imposed restrictions will be reviewed.

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