IIFL Finance postpones board meeting for Q4 results due to RBI audit, announces new schedule

IIFL Finance has announced an extension of its quarterly earnings release, initially scheduled for May 30, 2024. In a regulatory filing, the company cited an ongoing Special Audit initiated by the RBI as the reason for this delay. The audit, which follows an RBI order, has ordered the engagement of the company’s internal teams, thereby delaying the finalization of the financial results for the quarter and year for FY24. IIFL Finance now anticipates releasing the results by June 30, 2024.

Prevention Measures

Along with the announcement about the delay, IIFL Finance has implemented measures to prevent insider trading. The trading window will remain closed for designated persons, including directors and their immediate relatives, until 48 hours after the public release of the financial results.

RBI’s Directives on Gold Loans

Earlier in March 2024, the RBI directed IIFL Finance to cease sanctioning or disbursing new gold loans and to stop assigning, securitizing, or selling any existing gold loans. Despite these restrictions, the company is allowed to continue servicing its existing gold loan portfolio through standard collection and recovery processes.

Supervisory Concerns Highlighted by RBI

The RBI’s directives were named “material supervisory concerns” observed in IIFL Finance’s gold loan portfolio. These concerns included significant irregularity in certifying the purity and net weight of gold at the time of loan sanction and auction upon default, breaches in the Loan-to-Value ratio, and excessive disbursal and collection of loan amounts in cash beyond statutory limits. 

Additionally, non-adherence to the standard auction process and lack of transparency in charges levied to customer accounts were noted. The RBI emphasized that these practices not only violate regulations but also adversely affect customer interests.

RBI – Senior Management 

Over recent months, the RBI engaged with IIFL Finance’s senior management and statutory auditors to address these deficiencies. However, the RBI noted that no significant corrective actions had been taken by the company. Consequently, the RBI imposed restrictions on the announcement of financial results.

Conclusion:  In conclusion, the supervisory restrictions by the RBI will be reviewed upon the completion of the special audit and after IIFL Finance rectifies the issues highlighted along with addressing the RBI’s inspection results to their satisfaction.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.