IIFL Finance slumps 20% post RBI ban on sanctioning, disbursing gold loans

Shares of IIFL Finance slumped 20 per cent to the lower circuit on BSE at Rs 479 in Tuesday's intra-day trade after the Reserve Bank of India (RBI) barred the NBFC from sanctioning or disbursing gold loans or assigning/ securitising/ selling any of its gold loans. The regulator has, however, allowed IIFL to service its existing gold loan portfolio through the usual collection and recovery processes. A combined 196,914 equity shares changed hands and there were pending sell orders for 20.08 million shares on the NSE and BSE, as of 9:45 am. Following an inspection of IIFL Finance with reference to its financial position as on March 31, 2023, the RBI observed deviations in assaying and certifying purity and net weight of the gold at the time of sanctioning loans and at the time of auction upon default. The regulator also found breaches in the loan-to-value ratio, significant disbursements and collections of loan amount in cash far in excess of the statutory limit, non-adherence to the standard auction process, and lack of transparency in charges on customers.