IIFL Finance shares rally 9%, reverse 4-session losing streak
IIFL Finance jumped over 9% on Thursday to the day's high of Rs 417 on the NSE after breaking their four-session losing streak. The price action was amid strong volumes with over 79.84 lakh shares getting traded on the NSE at around 10 am.
On Wednesday, Fairfax India Holdings Corporation, a longstanding investor in IIFL Finance announced that it will provide liquidity support of $200 million amidst the RBI embargo on the company's gold loan disbursements.
The reversal comes after a 36% plunge in the stock over the past two trading sessions in the wake of the Reserve Bank of India (RBI) order directing the company to cease and desist from sanctioning or disbursing gold loans or assigning/securitising/selling any of its gold loans. It was followed by a downgrade by Jefferies.
The RBI decision came following an inspection of the company by the RBI with regard to its financial position as of March 31, 2023, where the banking regulator found discrepancies in company's functioning in certain areas.
«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; breaches in Loan-to-Value ratio; significant disbursal and collection of loan amount in cash far in excess of the statutory limit,» the company filing said quoting RBI's order.
Among other things, non-adherence to the standard auction process and lack of transparency
