Fairfax India to invest $200 mn of liquidity support in IIFL Finance

FAIRFAX INDIA Holdings Corporation has proposed to investupto$200million(aroundrs 1,660crore)ofliquiditysupportin IIFL Finance Ltd following the Reservebankofindia(rbi)banon thecompany'sgoldloandisbursements. After the 20 per cent plunge on Tuesday, shares of the company crashed by another 20 per cent to Rs 382.80 on the stock exchanges on Wednesday.

While the RBI'S embargo has raised liquidity concerns among the company’s investors and lenders, Fairfax liquidity support will be on terms to be mutually agreed and subject to applicable laws, including regulatory approvals."wehavebeenlong-term investorsintheiiflgroupofcompaniesandhavefulltrustandconfidence in the company's strong management team led by Nirmal Jain and R Venkataraman. We are confidentthatnirmalandvenkat will take corrective actions to meet and exceed RBI'S compliancestandards,”saidpremwatsa, Chairman of Fairfax India.

On Monday, the RBI barred IIFL Finance from sanctioning or disbursinggoldloansorassigning, securitising or selling any of its gold loans in the wake of several regulatory violations by the company.

In its December quarter investorpresentation,thecompany said it is among top two NBFCS in the country in the gold loans segment, having grown at a five-year CAGR of 39 per cent over FY201923. According to the company, its gold loan business amounted to Rs 24,692 crore, which is 32 per cent of the overall asset under management of Rs 77,444 crore asofdecember2023.iiflfinance hasover2,721dedicatedgoldloan branches spread across 25 states and Union territories, manned by 15,000 employees. 2022 2023

21.2% 18.3%