“Fairfax India Offers $200 Million Liquidity Boost to IIFL Finance”

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In response to recent regulatory constraints imposed by the Reserve Bank of India (RBI) on IIFL Finance, shareholder Fairfax India has stepped in to provide significant liquidity support. The move comes shortly after the RBI barred IIFL Finance from disbursing gold loans, citing supervisory concerns.

According to reports from news agency Reuters, IIFL Finance announced that Fairfax India has agreed to extend up to $200 million in liquidity support to address the liquidity concerns raised by the RBI’s embargo. This investment is subject to mutually agreed terms and applicable laws, including regulatory approvals.

The RBI’s directive to halt gold loan disbursements stemmed from supervisory concerns, including significant deviations in assaying and certifying the purity of gold, as outlined by the central bank. In response, IIFL Finance experienced a significant downturn, with its shares plummeting by 36% over the last two trading sessions.

Expressing confidence in IIFL Finance’s management team, Fairfax India’s Chairman, Prem Watsa, emphasized their long-term investment in the company and expressed trust in the leadership of Nirmal Jain and R Venkataraman. Watsa stated his belief that the management team will take corrective actions to meet and surpass the compliance standards set forth by the RBI.

Nirmal Jain, Managing Director and Founder of IIFL Finance, welcomed Fairfax India’s support during this critical period. He reiterated the company’s commitment to full compliance with the RBI’s directives and expressed confidence in the leadership’s ability to navigate through the challenges. Jain emphasized that the liquidity support provided by Fairfax India would serve as a timely and motivating boost for the company.

With both Fairfax India and IIFL Finance aligning their efforts to address the liquidity concerns and regulatory challenges, stakeholders remain optimistic about the company’s ability to overcome the current obstacles and sustain its growth trajectory under the guidance of regulatory compliance and robust risk management practices.

Sources By Agencies