Open to investors to strengthen IIFL Samasta's capital base: Nirmal Jain

Nimal Jain shared the lender's strategies and growth plans for 2025-26 (FY26)

The Reserve Bank of India’s (RBI’s) embargo on IIFL Finance was a “wake up” call for the lender and it used the opportunity to elevate its compliance, governance and control frameworks, said Nirmal Jain, founder and managing director (MD), 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:

 

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 ₹200,000 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.  Also Read: Jaiprakash Associates' CoC clears ₹936-cr cash outflow for June quarter

 

What has changed after the RBI embargo?

 

Key steps we undertook included establishing robust upward feedback loops from the branch level to the senior management and the board. This ensured that audit observations and compliance exceptions were escalated through formal MIS channels all the way to the board, and strengthened our technology infrastructure by deploying new compliance-tracking tools while tightening existing systems. We also augmented our compliance and internal audit teams with the requisite expertise. Additionally, we engaged KPMG to conduct an independent compliance audit, recognising that audit rigor must go beyond financial risk to encompass operational and regulatory risks as well. Additionally, we conducted a thorough root-cause analysis for every issue cited by the RBI to ensure ongoing compliance monitoring and review.

 

Is there a change in the growth strategy?

 

Our loan growth has not yet come back to the previous level; we are 10 per cent or little lower than the earlier level or from the peak level. Right now, the message is very clear that there cannot be any compromise on compliance risk or audit requirements. Nothing can be compromised for the sake of growth.

 

What is the assets under management (AUM) target for IIFL Finance in the next three years?

 

We expect loan AUM to grow at 15–20 per cent compound annual growth rate (CAGR) over the next three years. Gold loans, now recovering from last year’s embargo, and micro, small and medium enterprise (MSME) loans, which are scaling up steadily on a small base, will drive this growth. We aim to maintain a balanced portfolio with quality, scale, and profitability across businesses.

 

Is the company looking to do equity fundraise in FY26, and is there a plan to bring in a strategic investor for IIFL Samasta?

 

There is no plan for equity fundraise at the group level at present. We are monitoring capital adequacy of all the group companies closely and will discuss at the board level the strategy and seek guidance. For IIFL Samasta, we are open to a strategic investor participation to strengthen its capital base. We also plan to bring in global best practices, and accelerate long-term growth, in line with our responsible lending philosophy.

 

How much is IIFL looking to raise from the domestic capital market, overseas capital market, and development financial institutions (DFIs)?

 

We intend to raise around ₹8,000–10,000 crore from the domestic market through non-convertible debentures (NCDs), securitisation, and term loans. In parallel, we are exploring about $100–150 million through foreign currency loans, DFIs, and dollar bonds, depending on market appetite and cost efficiency.

 

What is the broad vision for the group in five years?

 

It depends on how the regulatory landscape emerges. If RBI converges the guidelines for all types of non-banking financial companies (NBFCs), then we can look at a merger. But right now, housing finance and microfinance have different guidelines. Otherwise, we also have an option to split like we did for our parent company for wealth, securities, and other businesses. This will help shareholders of the parent company get shares of all three entities – NBFC, housing finance company (HFC), and microfinance institution (MFI).

 

Do you have aspirations of becoming a bank?

 

Not at this point of time. It depends on RBI’s guidelines on new banks.