IIFL Finance: RBI Removes Restrictions On Gold Loan Business
IIFL Finance Ltd. said on Thursday that the Reserve Bank of India has removed restrictions on gold loan business.
The restrictions, placed in March, had required IIFL Finance to stop lending against gold with immediate effect. The banking regulator had then found serious operational lapses in the company's operations.
In August, IIFL Finance disclosed that it had submitted its compliance report to the regulator after addressing the concerns raised.
"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," IIFL Finance said in its statement.
The restrictions had led to a sharp fall in gold loan advances at IIFL Finance. It's outstanding loan book fell to a little over Rs 12,000 crore as of August 5, compared to over Rs 26,000 crore as of March 31, according to disclosures by the company.
NDTV Profit had reported on Thursday that IIFL Finance could face a rating downgrade owing to the delay in the removal of RBI restrictions, according to the people with knowledge of the matter. Moreover, the company was contemplating laying off staff, as the gold loan business was not able to grow.
The company employs about four or five gold loan employees in each of its 2,775 branches, the people quoted above said. It was already in the process of laying off employees at its low-profitability branches.
Shares of IIFL ended 6.2% lower at Rs 495.95 on Thursday. That compared with 0.15% gains in the country's benchmark NSE Nifty 50. The stock had decline 12.4% in the last 12 months.
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