INSUBCONTINENT EXCLUSIVE:
IIFL Finance | Photo: Facebook3 min read Last Updated : Aug 11 2024 | 6:37 PM IST
IIFL Finance Ltd has transferred stressed commercial
real estate loans in six accounts to an Asset Reconstruction Company (ARC) in Q1FY25 for a consideration of Rs 575 crore to effectively
accounts (SMA) worth Rs 390.98 crore
The company reversed excess provisions worth Rs 36.42 crore to a profit and loss account following the transfer of loans in the first
quarter ended June 2024 (Q1FY25), according to a filing with the stock exchange (BSE)
It, however, did not specify the name of the ARC to which it sold the loan pool.
Nirmal Jain, managing director, IIFL Finance, in the
post-result analyst call, said the company transferred some of the CRE cases to ARCs
The experience from the long-term point of view is that it may be a better way to manage these exposures, primarily because the 90-day
income recognition norm makes it difficult for further funding to the real estate project.
Even with a day of default (beyond 90 days), the
project goes into the non-performing category
Then it is very difficult to do incremental loans and sustain the projects
2024 and further to Rs 649 crore in June 2024, according to an analyst presentation.
Referring to its gold loan business, Jain said the
company evaluated the proposal to become a Business Correspondent (BC) to source loans for other lenders
However, it was discovered that banks have a longer process to appoint BCs, which starts with a Request for Proposal (RFP) and submitting a
will restart lending and co-lending (gold loans)
Then, the BC role may be an unwarranted distraction to resources and processes
Once you start BC activity, banks will expect a certain commitment in volume
From a commercial point of view, that may not be as viable for our cost structure
directed the finance company to stop sanctioning or disbursing new gold loans and the assignment, securitisation, or sale of existing gold
This followed supervisory concerns in disbursals and collections of loan amounts in cash exceeding statutory limits and non-compliance with
the standard auction process
Its gold loan book declined by 33 per cent year-on-year (Y-o-Y) to Rs 14,727 crore as of June 30, 2024.First Published: Aug 11 2024 | 6:37
