The assets under management (AUM) for gold loans at IIFL Finance decreased by more than Rs 7,000 crore in just three months, from Rs 23,354 crore in March 2024 to about Rs 16,000 crore in June 2024.
According to CRISIL Ratings, this comes after the Reserve Bank of India’s (RBI) limitations on IIFL Finance’s ability to approve new loans and distribute gold loans. In March 2024, the RBI had implemented restrictions due to several significant supervisory concerns.
According to IIFL Finance data, the AUM of the gold lending company was Rs 22,142 crore as of June 30, 2023, one year ago.
This RBI directive has no direct effect on the group’s other important activities, which include home loans, microfinance, loans secured by real estate, and others, according to a statement from CRISIL.
IIFL Finance’s bank facilities and debt instruments are still listed by CRISIL as being under “Rating Watch with developing implications.” The short-term ratings of “A1+” were confirmed.
“As a listed company, IIFL Finance is bound by regulatory guidelines, which stipulate that we cannot disclose financial data or performance metrics until they are officially announced,” IIFL Finance stated in answer to questions from Business Standard. As soon as the Q1 results are formally made public, we will share them with you.
According to the rating agency, there has been some slowdown in the amount of money raised through new penalties at IIFL Home Finance and IIFL Samasta Finance, a microfinance division.
CRISIL reports that there has been an improvement in the second part of June.
Naturally, the gold loan portfolio will continue to decline until the restrictions are removed. It further stated that any events resulting from this restriction that impede the group’s capacity to expand its non-gold portfolio will be a significant sensitivity factor.
IIFL Finance declared the conclusion of the special audit that was mandated by the RBI on June 4, 2024. The results of the special audit are being examined by the regulator.
The liquidity position of IIFL Finance was robust.
The IIFL Finance group had preliminary liquidity of Rs 6,455 crore, comprising unutilized cash credit limit of Rs 336 crore and cash and equivalents of Rs 4,435 crore.
According to CRISIL, the total amount of debt owed against this was Rs 4,256 crore for the three months ending in September 2024.