In response to these concerns, Fairfax India has agreed to extend up to USD 200 million of liquidity support on terms to be mutually agreed and subject to applicable laws, including regulatory approvals (if any), it added.
"We have been long-term investors in the IIFL group of companies and have full trust and confidence in the company's strong management team led by Nirmal Jain and R Venkataraman. We are confident that Nirmal and Venkat will take corrective actions to meet and exceed RBI's compliance standards," said Fairfax India chairman
Commenting on the development, IIFL Finance Managing Director Nirmal Jain said at this crucial juncture, Fairfax India's and Prem's generous offer to provide liquidity support is very timely and motivating.
"We are committed to complying fully with RBI's directives and growing the business under the regulator's guidance on the strong foundation of compliance, risk management, and fair practices," Jain said.
Earlier this week, the
IIFL Finance offers a range of loans and mortgages. The latest directions from the RBI pertain to only the gold loan business.
The RBI in a statement had said certain material supervisory concerns were observed in the gold loan portfolio of the company.
The concerns include serious deviations in assaying and certifying purity and net weight of the gold at the time of sanction of loans and at the time of auction upon default; breaches in loan-to-value ratio; significant disbursal and collection of the loan amount in cash far in excess of the statutory limit; non-adherence to the standard auction process; and lack of transparency in charges being levied to customer accounts.