IIFL Finance has said the RBI has lifted the restrictions imposed on its gold loan business in March for failing to meet a slew of regulatory requirements.
“The RBI through its communication dated September 19, 2024, has lifted the restrictions imposed on the gold loan business of the company. The decision is effective immediately and allows us to resume the sanctioning, disbursal, assignment, securitization, and sale of gold loans in compliance with all relevant laws and regulations," said IIFL Finance in a stock exchange filing Thursday.
The RBI had imposed the curbs on the company on March 4, 2024 which had badly impacted its business, leading to unpaid salaries. The number of employees in its gold loan branches has dropped from 15,000 in March to 12,000 in June, according to its financial reports and the gold loan book more than halved to Rs 12,162 crore as of August since the March ban.
IIFL fell under regulatory scrutiny in March amid a crackdown on financial firms, when it was asked by the RBI to stop disbursing new gold-backed lending following “material supervisory concerns”.
Following this, all the main local rating agencies Crisil, Icra and Care Ratings had put it under rating watch with negative or developing implications following the ban. International rater Fitch Ratings also put its B+ rating on negative watch.
In March, the RBI said an inspection of the company was carried out by it with reference to IIFL’s financial position as of March 31, 2023.
“Certain material supervisory concerns were observed in the gold loan portfolio of the company, including serious deviations in assaying and certifying purity and net weight of the gold at the time of sanction of loans and at the time of auction upon default,” it noted.