IIFL facing liquidity crunch as banks await RBI audit to get over after gold loan business ban

Since the pandemic it has been growing faster and has doubled the branch strength to over 2,700 and serves 56 lahk customers.

The gold loan vertical is the second largest for IIFL with around Rs 24,692 crore of AUM as of December 2023 after the home loan vertical which is about Rs 30,000 crore, but is the most profitable arm of the group founded by Nirmal Jain that also runs a successful microfinance arm with around Rs 15,000 crore of AUM with Rs 500 crore of net income in the December quarter. But as much as 57 percent of the gold loan book is the co-lending model.

Soon after the regulatory ban, the company had canceled a proposed $400 million dollar bond issue plan. But within days of the ban, Watsa agreed to chip in with $200 million of immediate liquidity.

We are not keen to disburse the already sanctioned loan nor looking at fresh sanctions. Let the RBI appointed external audit to be completed, two bankers who wished to be unidentified told The New Indian Express on Monday.

The company did not respond to calls.

Its been learnt that the RBI appointed external auditor has begun the job from April 24 and is likely to be completed over the next three to four weeks.

But one of the bankers said other businesses are running smoothly with already existing liquidity.