IIFL Finance, one of India’s major non-banking financial companies (NBFCs), on Tuesday, October 1 said that credit rating agency CRISIL has removed the firm from its 'Rating Watch with Developing Implications' list, and reaffirmed IIFL Finance's long-term ratings at 'CRISIL AA/CRISIL AA-/CRISIL PPMLD AA' while assigning a 'Stable' outlook.
The company’s short-term rating has also been reaffirmed at ‘CRISIL A1+’.
In its rating rationale, issued on September 30, CRISIL explained, “The rating action follows the lifting of the regulatory embargo on the gold loan business of IIFL Finance, disclosed by the company vide the announcement dated September 19, 2024, thereby allowing the group to resume sanctions and disbursements in this segment as in the normal course of business, as well securitization/assignment/sale of loans."
CRISIL added that IIFL Finance has a strong track record in growing its gold loan business, a core segment for the company.
"With the regulatory restriction being removed, and the company having taken requisite corrective measures following the action by the Reserve Bank of India (RBI), the group is expected to focus on regaining its market share in the gold loan business which should support the restoration of its market position and profitability, which had moderated during the embargo," CRISIL noted.
The RBI had placed an embargo on IIFL Finance’s gold loan operations on March 4, 2024, halting the company’s ability to sanction, disburse, or securitise gold loans. Following a special audit and regulatory inspections, the embargo was lifted on September 19, 2024.
CRISIL further highlighted that the ratings are supported by the group’s strong capital position, operational track record in home loans and microfinance, and stable profitability underpinned by healthy asset quality. However, it pointed out that IIFL Finance faces challenges related to its resource profile, particularly with a moderately higher cost of funds compared to some competitors.
Commenting on the rating, Kapish Jain, President & Group Chief Financial Officer of IIFL Finance, said, “The outlook change and rating reaffirmation by CRISIL is a validation of our sound business model and our proven track record of building successful and profitable businesses with highest standards of governance & transparency.”
IIFL Finance operates across a range of loan products, including gold loans, affordable home loans, microfinance loans, and business loans. As of June 30, 2024, the company managed consolidated assets worth ₹69,610 crore, solidifying its position as one of India's largest retail-focused NBFCs. The firm operates over 4,400 branches nationwide and leverages digital platforms to provide credit services, especially to underserved small entrepreneurs.
