IIFL Finance To Diversify Business, Reduce Dependence On Gold, Says Chairman AK Purwar

IIFL Finance Ltd. is exploring the diversification of its assets to reduce the company's overdependence on gold loan business, said AK Purwar, who is the lender's chairman and independent director.

"We will be looking to substantially diversify our business. We want to add more verticals, maybe auto loans, or something else, or something more innovative. The aim is to ensure we have a couple of important product lines and our overdependence on gold loans portfolio gets reduced," Purwar said in an interaction with NDTV Profit on Friday.

The remarks come a day after the Reserve Bank of India lifted the restrictions that barred IIFL Finance from lending against gold. The curbs were placed in March, when the banking regulator had found serious lapses in the company's operations.

In August, IIFL Finance disclosed that it had submitted its compliance report to the regulator after addressing the concerns raised.

The RBI, with immediate effect, has allowed the company to "resume the sanctioning, disbursal, assignment, securitisation, and sale of gold loans in compliance with all relevant laws and regulations,"  the NBFC said in a statement on Thursday.

On being asked about the changes adopted by IIFL Finance following the RBI action, Purwar said the company has "completely stopped any cash disbursement above Rs 20,000."

The company also "started e-auction to auction various gold ornaments in cases of default" in view of the concerns flagged by the RBI, he added.

The immediate focus of the company is on recovering its outstanding loan book, which dropped sharply following the curbs imposed by the RBI earlier this year, Purwar said.

The advances fell to a little over Rs 12,000 crore as of Aug. 5, compared to over Rs 26,000 crore as of Mar. 31, according to disclosures by the company.

"We want to not only recover our loan book but ensure that we exceed it by March 31, 2025," the IIFL Finance chairman added.

Commenting on the impact of the RBI's curbs, Purwar said keeping the company profitable "became a big challenge."

One of the biggest impacts of the RBI restrictions has been on the onboarding of small borrowers, he explained. Before the restrictions came into effect, the lender was funding around 30,000 small borrowers per day. "That kind of business has vanished. Most of our loyal customers feel pinched," he said.

Retaining the workforce also emerged as a challenge, as several of the staff found it difficult to sustain only with the fixed component of their salary, Purwar said. Their variable component "vanished" due to the regulatory crackdown on the gold business, which led to the exit of some of the employees, he added.

Shares of IIFL Finance settled 6.94% higher at Rs 530.35 apiece on the NSE, compared to a 1.48% rise in the benchmark Nifty 50.