IIFL Finance has decided to postpone its quarterly earnings announcement, which was originally set for May 30, due to an ongoing audit by the Reserve Bank of India (RBI). In a statement to the stock exchanges, IIFL Finance said it needs more time to finalize and approve the financial results for the quarter and year ending March 31, 2024. The company now plans to release these results by June 30, 2024.
Reason for Delay
The delay is because IIFL Finance’s internal teams are currently occupied with a special audit ordered by the RBI on March 4, 2024. To prevent insider trading, IIFL Finance also announced that its trading window will remain closed for certain individuals, including directors and their immediate family members, until 48 hours after the financial results are publicly released.
RBI’s Restrictions on Gold Loans
In early March, the RBI instructed IIFL Finance to stop giving out new gold loans and to halt any activities related to assigning, securitizing, or selling its gold loans. However, the company can continue to manage its existing gold loan portfolio through regular collection and recovery processes.
Reasons Behind RBI’s Actions
The RBI took this action due to significant issues in IIFL Finance’s gold loan operations, including:
- Problems with checking and certifying the purity and weight of gold used for loans.
- Violations of the Loan-to-Value ratio.
- Excessive cash transactions beyond the legal limits.
- Not following standard auction procedures.
- Lack of transparency in customer charges.
These issues not only break regulations but also harm customer interests, according to the RBI.
Company Response and Next Steps
Over recent months, the RBI has discussed these issues with IIFL Finance’s senior management and auditors, but no significant corrective actions have been taken. The RBI’s restrictions will remain until the special audit is completed and IIFL Finance addresses the audit findings to the RBI’s satisfaction.
