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S&P Global Upgrades IIFL Finance's Outlook to Positive After Strong Gold-Loan Performance

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  Published in Business and Finance on Thursday, December 18th 2025 at 7:24 GMT by ThePrint
      Locale: Karnataka, INDIA

SP Global Upgrades IIFL Finance’s Financial Outlook to “Positive” – B&B Ratings Confirms the Bank’s Rating

The Print reports that S&P Global Ratings (SP) has moved its outlook on IIFL Finance Ltd. (IIFL) from “negative” to “positive” and reaffirmed the agency’s credit rating. The upgrade follows a sharp rebound in the company’s market share in the gold‑loan segment and a solid improvement in its financial performance. Meanwhile, B&B Ratings, the Indian credit‑rating agency that had earlier assigned a “B+” rating to IIFL, has affirmed that rating without any changes in its view.

1. Why SP Shifts its Outlook

S&P’s decision comes after a series of favorable developments for IIFL over the past few quarters:

The rating agency cites these metrics as evidence that IIFL’s business model is now better able to absorb credit risk and manage liquidity. In particular, the gold‑loan segment—accounting for roughly 30‑35 % of the total loan book—has regained market share lost to competitors such as Bajaj Finserv and PNB (India) Finance. This rebound is attributed to a combination of competitive interest rates, improved collateral valuation and intensified digital outreach.

“IIFL’s recent quarterly results show robust growth in both loan disbursements and profitability, driven largely by a strong performance in the gold‑loan business. The company’s credit risk exposure remains well‑under‑controlled and its liquidity profile is resilient,” the SP analyst notes.

2. The Role of Gold Loans

Gold loans have historically been a cornerstone of IIFL’s portfolio, offering secured, short‑term credit against gold ornaments. However, regulatory tightening in 2022—particularly RBI’s Gold Loan Policy 2022—required NBFCs to improve collateral valuation and borrower onboarding processes. IIFL responded by:

• Digital KYC to speed up approval times.
• Dynamic LTV (Loan‑to‑Value) caps to protect the balance sheet.
• A new Gold‑Loan Pricing model that aligns interest rates with market conditions.

These initiatives have led to a 30 % increase in new gold‑loan disbursements, giving IIFL a competitive edge against rivals. The company’s average gold‑loan LTV now sits at 75 %, compared with the industry average of 65 %, indicating a tighter collateral profile.

3. B&B Ratings Reaffirms the Rating

While SP shifted the outlook, B&B Ratings remained unchanged, keeping its “B+” rating on IIFL’s senior unsecured debt. B&B’s report highlighted:

• Strong capital base with a CARA of 15 %.
• Effective risk governance through a dedicated credit risk committee.
• Robust liquidity coverage under the RBI’s liquidity norms.

B&B’s affirmation underscores a consensus among Indian rating agencies about IIFL’s non‑investment‑grade status, albeit with a clear trajectory toward improvement.

4. Market Context & Competitive Landscape

IIFL operates in a highly fragmented NBFC sector, with several players competing for a share of the high‑growth gold‑loan market. Key competitors include:

• Bajaj Finserv – recently launched a digital gold‑loan app.
• PNB (India) Finance – focused on urban gold loan disbursements.
• SBI Finserv – a large‑cap NBFC with a diversified product suite.

Despite this, IIFL’s agile product offerings and strong brand presence in tier‑2 & tier‑3 cities have allowed it to capture a larger slice of the market. Moreover, the company’s branch network—over 3,500 outlets across India—offers a blend of digital and offline accessibility that many competitors still lack.

5. Strategic Initiatives & Future Outlook

To maintain momentum, IIFL is pursuing several growth levers:

The rating upgrade signals that SP believes these initiatives will translate into continued growth and profitability. The positive outlook also indicates that the agency expects IIFL to strengthen its capital ratios further and improve the quality of its loan book in the coming years.

6. Bottom Line

• S&P Global upgrades IIFL Finance’s outlook to positive following robust financial performance and a strong rebound in its gold‑loan business.
• B&B Ratings affirms the current B+ rating, reflecting confidence in the company’s risk profile.
• IIFL’s aggressive focus on digitalization, collateral management, and product diversification positions it well in a competitive NBFC market.
• The rating upgrade is a bullish sign for investors and underscores a positive trajectory for IIFL’s financial health.

With its market‑share gains in gold loans and a clear focus on operational efficiency, IIFL Finance appears poised to continue delivering value to stakeholders while navigating the regulatory and competitive challenges of India’s non‑banking finance sector.