The Aryavarth Express
Agency (New Delhi): Fitch, the rating agency, has placed India’s IIFL Finance’s long-term issuer default rating and medium-term note program rating on negative watch. This action follows the recent decision by the country’s central bank to restrict the non-banking finance company from offering gold loans, citing significant supervisory concerns.
According to Fitch, this move reflects potential downside risks to IIFL Finance’s franchise, profitability, and overall risk profile if regulatory restrictions on new gold-backed lending persist. The impact of these restrictions will largely depend on their duration and any potential spill-over effects on the company’s other business operations.
As of December 31, the company’s gold loans under management totaled 246.92 billion rupees, constituting approximately 32% of its total loan assets. To bolster its capital, IIFL Finance announced plans to raise funds of up to 20 billion rupees and secure up to $200 million in liquidity support from its major shareholder, Fairfax India.
Following the Reserve Bank of India’s imposition of restrictions on March 4, the company’s shares have plummeted by nearly 38%. On Thursday, the stock experienced a further decline, settling 3.5% lower.
