JM Financial trades 4% down, IIFL Finance sheds 5.5% as RBI initiates special audit

Shares of JM Financial dropped around 4 percent, and those of IIFL Finance plunged 5.5 percent after the Reserve Bank of India announced a special audit for the two companies.

At 12.40pm, JM Financial traded at Rs 72 on the BSE, down 3 percent from its previous close, while IIFL Finance fell 2.5 percent to Rs 325 a share.

JM Financial extended its decline, trading in the red in 11 out of the last 16 sessions, while IIFL Finance lost in 12 sessions. Since early March, IIFL Finance shed over 45 percent, while JM Financial fell nearly 25 percent.

Experts anticipate the audit to take four to six weeks, potentially resulting in tightened processes to ensure clean loans and prevent overleveraging. Analysts also suggested that joint regulatory action may address concerns over undetermined credit use.

The RBI previously raised concerns about IIFL Finance gold loan portfolio and prohibited certain loan activities. JM Financial was also barred from certain financing activities.

Motilal Oswal in its latest note said prolonged bans may lead to further decline and reputational damage for IIFL Finance.

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