'Open to investors for strengthening IIFL Samasta's capital base'

The Reserve Bank of India's (RBI's) embargo on IIFL Finance was a "wake-up" call for the non-banking financial company (NBFC) and it used the opportunity to elevate its compliance, governance, and control frameworks, said Nirmal Jain, founder and managing director, in an interview with Anupreksha Jain and Subrata Panda, in Mumbai. He also shared the lender's strategies and growth plans for 2025-26 (FY26). Edited excerpts:

- Nirmal Jain, founder and managing director

FY25 was a tumultuous year for IIFL.

FY25 was an extraordinary year in the history of the IIFL Group — a year that tested our resilience but ultimately made us stronger. We faced several challenges, the most significant being the RBI-imposed embargo on our gold loan business in March 2024. While the embargo came as a surprise, we acknowledged the regulatory observations in full seriousness. Some key deviations noted by the RBI were — disbursal of cash above ₹20,000 (up to ₹2,00,000 in some cases), and conducting auctions at a centralised hub rather than the local Taluka level. These practices, while prevalent across the industry, were not aligned with the regulator's expectations. In hindsight, we recognise that adherence to regulatory guidelines must be independent of perceived industry norms. Sometimes, a sector-wide practice evolves under tacit assumptions, but the onus remains on each institution to comply fully with the letter and spirit of the law. In this instance, we happened to be among those firms where the regulator chose to enforce corrective action. We treated the embargo as a wake-up call and an opportunity to elevate our compliance, governance, and control frameworks.

What has changed after the RBI embargo?