IIFL Finance share price falls 20% more after RBI ban; Jefferies ‘hold’ call: Will decline continue?

IIFL Finance share price: The RBI directed IIFL Finance to cease and desist from sanctioning or disbursing gold loans.

IIFL Finance share price: Shares of IIFL Finance declined 20 per cent for the second straight session. This comes after Reserve Bank of India's (RBI) decision to ban the company from issuing gold loans on Monday. IIFL Finance shares are at the lowest level in 52 weeks.

IIFL Finance share price: Check latest price below.

Following the ban, global brokerage firm Jefferies downgraded IIFL Finance to 'hold' from ‘buy’. It also cut the target price to ₹435 per share from ₹765 as analysts expect the stock to further fall by 9 per cent.

IIFL Finance share price: RBI's action against IIFL Finance

The RBI directed IIFL Finance to cease and desist from sanctioning or disbursing gold loans after an inspection of the company revealed discrepancies in functioning in certain areas, it said.

"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 gold at the time of loan sanctions, breaches of loan-to-value ratio, and significant disbursal and collection of loan amount in cash far in excess of the statutory limit," the company filing said.

IIFL Finance share price: What Jefferies said on the stock?

Jefferies noted that that the gold loan ban is expected to hurt IIFL's profit as it said that “the RBI's order can dent earnings due to rapid unwinding of profitable gold loan book. Given the time of lifting of the ban is uncertain and we assume that the ban would stay for 9 months, we expect assets under management (AUM) to fall 1 percent YoYand 51 percent YoY fall in gold AUM in FY25.”