New Delhi: 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 concerning its financial position as of 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 amounts in cash far over the statutory limit, non-adherence to the standard auction process, and lack of transparency in charges on customers.
IIFL Finance, in an exchange filing, said the company is committed to rectifying RBI observations in its gold loan portfolio to comply with the findings at the earliest.
Motilal Oswal Financial Services believes this is a major negative setback for IIFL as gold loans constitute 32 per cent of its asset under management (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, it believes.
 Meanwhile, shares of IIFL Securities slipped 9 per cent to Rs 139 on the BSE in intra-day trade. In comparison, the S&P BSE Sensex was down 0.18 per cent at 73,340.
