A customer counts Indian one-hundred rupee banknotes (Photographer: Dhiraj Singh/Bloomberg)

Q4 Results: Expect New Government, RBI To Resolve Liquidity Stress, Says IIFL

IIFL Holdings Ltd. expects the new government and the Reserve Bank of India to resolve the liquidity stress faced by non-bank lenders.

“Liquidity, despite the RBI’s Rs 3 lakh crore in open market operations, is still very tight because a lot of physical cash is out of the system,” Nirmal Jain, founder and chairman of the IIFL Group, told BloombergQuint.

Wholesale-focused non-banking financial companies will have to completely recalibrate their model by infusing more capital from equity as well as bonds or foreign capital, Jain said. “In the interim, they may have a relatively higher cost of funding.” Retail-focused NBFCs, he said, will have to align themselves by co-lending with banks.

“I’m sure as soon as there is a new government in power, the government and the RBI will resolve this issue which is a systemic liquidity shortfall,” Jain said.

The non-bank lender reported a 17 percent year-on-year fall in revenue in the quarter ended March.

Key Earnings Highlights:

  • Revenue down 17 percent to Rs 1,411.5 crore, year-on-year.
  • Net profit up 20 percent to Rs 274.3 crore, year-on-year.
  • Net profit higher due to exceptional gain, lower tax and higher other income.
  • Exceptional gain of Rs 104.6 crore from sale of vehicle financing business.

Watch the full interview here: