RBI’s special audit over, IIFL Finance appoints team to implement corrective actions

New Delhi: IIFL Finance, which caught the eyes of the Reserve Bank of India (RBI) for the significant irregularities in its gold loan portfolio, said it has taken necessary measures to address the identified concerns and prevent their recurrence.

The company has formed a team to implement corrective actions and revise policies and procedures, IIFL Finance added in a statement.

In early March this year, RBI directed the company to stop sanctioning or disbursing new gold loans or assigning, securitising, or selling any of its gold loans.

Explaining the rationale behind this move, RBI had indicated that certain "material supervisory concerns" were observed in the company's gold loan portfolio.

Serious deviations in assaying and certifying purity and net weight of the gold at the time of sanction of loans were also observed. The regulator initiated a special audit by an independent professional agency, which commenced on April 23, 2024, which has concluded.

However, IIFL Finance was permitted to continue servicing its existing gold loan portfolio, including loan collections and recoveries and to maintain its other business operations.

To reduce its risks, the company has raised Rs 1271.3 crore of capital through rights issues, it said in the statement. In addition, it has secured Rs 500 crore through non-convertible debentures (NCDs) from long-term investors.

It also has implemented cost control measures such as the reduction of major discretionary expenditures, as per the company.

"These actions ensure that the company's projected cash flows over the next three years will meet its financial obligations, maintaining robust capital adequacy," the company said.

In the fourth quarter (Q4)ended in March, the company reported a net profit after tax of Rs. 431 crore (before non-controlling interest) down 6 per cent y-o-y. Profit before tax (PBT) for the quarter stood at Rs 554 crore down 7 per cent y-o-y.

It is noteworthy that in Q4 loan growth in core products was robust. Loan growth in core products was robust - Gold loans and Home loans AUM grew by 13 per cent and 26 per cent y-o-y respectively, as per the company's filing on June 16 at the National Stock Exchange (NSE).  (ANI)

Also Read: RBI hikes limit of bulk deposits for banks, FD investors to gain: Governor Shaktikanta Das

Also Watch: