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## IIFL Finance Shares Plummet After RBI’s Gold Loan Ban

Shares of IIFL Finance took a severe hit, plummeting 20 percent for the second consecutive session following the Reserve Bank of India’s (RBI) decision to prohibit the company from issuing gold loans. At 9.41 am, shares of IIFL Finance were locked in the lower circuit at Rs 382.20 on the NSE, marking a 52-week low.

### Impact on IIFL Finance and Jefferies Downgrade
The global brokerage firm Jefferies reacted to the ban by downgrading IIFL Finance to a ‘hold’ from ‘buy,’ with the target price slashed to Rs 435 per share from Rs 765. This downgrade implies further potential downside of 9 percent for the stock after the recent 20 percent decline.

### How AI legalese decoder Can Help
The AI legalese decoder can assist in deciphering the legal jargon and implications of RBI’s order on IIFL Finance’s operations. By translating complex regulatory language into layman’s terms, this tool can provide a clearer understanding of the situation for investors and analysts.

### RBI’s Directive and Supervisory Concerns
The RBI instructed IIFL Finance to halt the sanctioning and disbursing of gold loans due to discrepancies found during a recent inspection. These concerns included issues with assaying gold purity, loan-to-value ratio breaches, and excess cash transactions beyond statutory limits.

### Forecasts and Financial Impact
Analysts at Jefferies predicted a negative impact on IIFL Finance’s profits due to the sudden halt in gold loan operations. The firm anticipates a decline in assets under management and EPS, along with a reduction in Return on Equity (RoE) for the coming fiscal years.

### Ongoing Supervisory Engagement and Service Continuation
Despite ongoing discussions with the RBI to address operational deficiencies, IIFL Finance has yet to implement substantial corrective actions. However, the company has been allowed to continue servicing its existing gold loan portfolio through regular collections and recovery processes.

### Conclusion
The unfolding situation between IIFL Finance and the RBI underscores the importance of regulatory compliance and risk management in the financial sector. Investors and stakeholders must closely monitor developments and seek expert financial advice before making any investment decisions.

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