Fitch Ratings Upgrade of IIFL Finance
Fitch Ratings announced on 18 August 2026 that it has upgraded IIFL Finance Limited’s long‑term Issuer Default Rating (IDR) from B+ to BB‑ and has also raised the senior secured debt and Global Medium‑Note Programme (GMTN) ratings to BB‑ from B+. The outlook accompanying the upgrade is Stable.
The rating agency attributed the upgrade to a sustained improvement in IIFL’s business and risk profiles and to stabilisation of asset quality. Loan growth rebounded strongly in the financial year ending March 2026, with total loans increasing by 27% year‑on‑year, a sharp acceleration from the 8% rise recorded in FY25. This resurgence followed the lifting of regulatory restrictions on IIFL’s gold‑backed lending business in September 2024 and was supported by broadened funding flows that enabled new disbursements across key product lines.
Fitch highlighted that IIFL has pivoted its portfolio toward secured lending. The company exited unsecured personal lending and remains cautious on micro‑finance expansion. Secured loans, which include gold‑backed and mortgage products, grew to represent 90% of the loan book by FY26, up from 80% at the end of FY25. Gold‑backed lending, considered a lower‑risk segment, is expected to remain the largest lending category, accounting for more than 50% of the consolidated portfolio over the medium term.
Asset‑quality metrics have improved. The non‑performing loan (NPL) ratio eased to 1.5% in FY26 from 2.2% in FY24, reflecting firmer underwriting standards and enhanced risk‑and‑collection frameworks. Irregular non‑loan assets, primarily legacy commercial‑real‑estate loans sold to asset‑reconstruction companies, are projected to fall below 5% of credit exposures in the near term as resolution progresses. Credit costs are expected to remain contained, with an annualised rate of 1.6% in 1QFY27 versus an average of 2.4% over FY23‑FY26, aided by a 90% provision coverage.
Profitability has shown a marked recovery. Pretax profit, measured as a percentage of average assets, improved to 4.1% in 1QFY27 after a sharp decline to 1.1% in FY25 (FY26 recorded 3.1%). The improvement is driven by higher loan volumes, a stable net interest margin, and contained operating and credit costs.
Mr. Vikas Jain, Chief Financial Officer of IIFL Finance, said the upgrade recognises sustained improvements in the company’s business and risk profile, asset quality, profitability and funding access, and reaffirmed the firm’s focus on disciplined growth, a predominantly secured‑lending portfolio, strong risk management and prudent capital and liquidity management.