IIFL Finance share price on Tuesday saw a 20% decline soon after opening as investors turned cautious after the Reserve Bank of India barred the company from sanctioning or disbursing any new fresh gold loans. The company’s gold loans contribute to over 30% of its overall mix and analysts believe that this will translate into a significant hit for the company’s financials in the coming quarters. IIFL Finance shares hit a low of Rs 477.75, down 20% on the NSE in the morning trade.
The inspection by RBI on IIFL Finance uncovered troubling deviations in the assaying and certification process of gold purity and net weight, both during loan sanctioning and auction proceedings in the event of defaults. Additionally, breaches in Loan-to-Value ratio, excessive cash disbursals and collections surpassing statutory limits, non-compliance with standard auction protocols, and lack of transparency in customer account charges were identified as key areas of concern.
