IIFL Finance share price jumps over 12% as RBI lifts restrictions on gold loan business

IIFL Finance share price jumped over 12% in early trade on Friday after the Reserve Bank of India (RBI) lifted the restrictions imposed on its gold loan business. IIFL Finance shares surged as much as 12.33% to a high of ₹555.25 apiece on the BSE.

The banking regulator RBI has lifted the restrictions imposed on the gold loan business of IIFL Finance, the company informed in a regulatory filing on Thursday.

“These restrictions were earlier imposed on March 04, 2024, which prohibited the Company from sanctioning, disbursing, or assigning/securitising/selling any of its gold loans. The RBI's decision is effective immediately and allows the Company to resume the sanctioning, disbursal, assignment, securitization, and sale of gold loans in compliance with all relevant laws and regulations,” the BSE filing said.

The company is committed to upholding the highest standards of compliance and will continue to ensure that the remedial actions taken are sustained, it added.

In March, the central bank had ordered the company to stop offering gold loans, citing supervisory concerns in its gold loans portfolio. Since then, IIFL Finance share price has slipped nearly 15%. The latest RBI action comes as a removal of a key overhang on IIFL Finance.

The hit from the ban has been “significant”, IIFL Finance had said in June, adding that its focus in the current year would be towards “compliance” and “risk management”, Reuters reported.

The company had tried to assuage investor concerns, stating there were no governance lapses and the issue were operational.

However, days after the RBI restriction, IIFL Finance secured an investment of up to $200 million from its top shareholder Fairfax India as liquidity support.

At the end of FY24, gold loans under the non-banking financial company's (NBFC) management accounted for 30% of its total assets.

IIFL Finance share price has jumped over 18% in one month and more than 14% in three months. However, IIFL Finance stock us down 9% year-to-date (YTD).

At 9:25 am, IIFL Finance shares were trading 11.27% higher at ₹550.00 apiece on the BSE.