BENGALURU (Reuters) – IIFL Finance said a special audit directed by the Reserve Bank of India (RBI) started on Tuesday, about one-and-a half month after the country’s central bank barred the non-bank finance company from disbursing gold loans.
In early March, the RBI ordered IIFL Finance to stop sanctioning, disbursing and selling gold loans, citing “material supervisory concerns” in its gold loan portfolio, raising liquidity concerns among its investors and lenders.
Gold loans accounted for nearly a third of the company’s total loan assets as of 2023-end.
Since the order, IIFL has lost nearly 30% in market value.
The RBI said in March that the restrictions will be reviewed after completion of a special audit and the company’s rectification of the audit findings.
“We are committed to extending full cooperation to the special audit team to ensure a comprehensive and thorough audit,” IIFL said on Tuesday.
Meanwhile, the company has received liquidity support from its top shareholder Fairfax India and decided to raise funds to assuage some of the concerns.
(Reporting by Nishit Navin in Bengaluru; Editing by Shounak Dasgupta)
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