Fitch Ratings has affirmed the ratings of India-based IIFL Finance Ltd., a prominent non-banking financial company (NBFC), with a stable outlook. This comes after the Reserve Bank of India (RBI) lifted a temporary restriction on new gold-backed lending for IIFL Finance, which had been in place since March. The restriction was removed in September, allowing the firm to resume its gold-backed lending business, which has been a significant part of its portfolio.
Fitch Ratings has confirmed IIFL Finance’s long-term issuer default rating (IDR) at ‘B+’ and also affirmed the same rating for its medium-term note program. The ratings have been removed from ‘Rating Watch Negative,’ indicating that the immediate concerns around regulatory restrictions have eased. This stable outlook from Fitch shows confidence that IIFL Finance can gradually stabilize its business operations despite recent regulatory disruptions.
Despite challenges with gold-backed lending, Fitch Ratings noted that the funding volume for IIFL Finance’s other subsidiaries, particularly housing finance and microfinance, has been stable and resilient. These subsidiaries have provided a steady stream of revenue and are expected to continue supporting the overall credit profile of IIFL Finance. Their growth can help offset potential slowdowns in the gold-backed lending sector and maintain the company’s financial stability.
With the lifting of the RBI ban, IIFL Finance can once again engage in new gold-backed lending, though funding availability for this segment might remain cautious. Fitch Ratings’ affirmation of a stable outlook suggests confidence that IIFL Finance will navigate these challenges through the steady performance of its housing finance and microfinance businesses. Sustained profitability and strategic growth across all business lines will be key for IIFL Finance as it aims to recover and strengthen its market position in the coming months.
