India’s IIFL Finance said on Wednesday that top shareholder Fairfax India has agreed to provide up to $200 million in liquidity support to the company, days after the country’s central bank barred the firm from disbursing gold loans, raising liquidity concerns among investors and lenders.
“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,” said Prem Watsa, chairman of Fairfax India, which holds around 15% stake in IIFL Finance.
The RBI on Monday ordered IIFL Finance to stop sanctioning, disbursing and selling gold loans with immediate effect, citing “material supervisory concerns” in its gold loan portfolio.
Shares of IIFL Finance have lost about 36% since the RBI order and were last down 20% on Wednesday at the lower end of an exchange-imposed trading band.
“We are committed to complying fully with RBI’s directives and growing the business under the regulator’s guidance,” said Nirmal Jain, managing director and founder of IIFL Finance.
Reuters