IIFL Finance share price jumped over 12 per cent 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 per cent to a high of Rs 555.25 apiece on the BSE.

The company announced that the RBI has lifted restrictions on its gold loan operations. The company can now resume its lending activities after addressing previous regulatory concerns regarding loan processes.

“RBI, through its communication dated September 19, 2024, has lifted the restrictions imposed on the gold loan business of the company. The RBI’s decision is effective immediately and allows the Company to resume the sanctioning, disbursal, assignment, securitisation, and sale of gold loans in compliance with all relevant laws and regulations,” said IIFL Finance in a stock exchange filing.

On September 19, IIFL Finance’s shares on NSE closed trading 6 per cent lower at Rs 497 apiece.

“The Company is committed to upholding the highest standards of compliance and will continue to ensure that the remedial actions taken are sustained,” added IIFL Finance.

RBI had imposed the curbs on March 4, 2024.

IIFL fell under regulatory scrutiny in March amid a crackdown on financial firms, when it was asked by RBI to stop disbursing new gold-backed lending following “material supervisory concerns”. Three local rating companies – ICRA Ltd, Crisil Ltd and Care Ratings Ltd – put it under rating watch with negative or developing implications following the ban.

International credit assessor Fitch Ratings also put its B+ rating on negative watch.

The assets under management in its gold loan business more than halved to Rs 12,162 crore as of August 5 since the March ban.

In March, RBI said an inspection of the company was carried out by it with reference to IIFL’s financial position as of March 31, 2023.

“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…,” it noted.

In March, RBI had said the supervisory restrictions will be reviewed upon completion of a special audit to be instituted by the RBI and after rectification by the company of the special audit findings and the findings of RBI inspection are to the satisfaction of the central bank.

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