India's IIFL Finance jumps 13% after cenbank lifts curb on gold loan business

BENGALURU, Sept 20 (Reuters) - Shares in India's IIFL Finance jumped about 13% on Friday, after the country's central bank lifted restrictions on the non-banking financial company's gold loan business, removing a key overhang on its financials and stock.

Shares rose as much as 13.2% to 560.95 rupees, their highest since late February. The stock was last up 9.2% at 541 rupees as of 10:12 am IST. It had fallen about 14% as of last close, after the RBI's ban came in March.

In March, the Reserve Bank of India had ordered IIFL Finance to stop disbursing gold loans with immediate effect, citing "material supervisory concerns" in its gold loan portfolio.

Following the curbs, the company started a special audit in April as directed by the RBI.

Gold loans accounted for 21% of the company's total loan assets, as of June 30, down from 30% as of March-end.

Some analysts had expected rival gold loan financiers such as Manappuram Finance and Muthoot Finance to benefit from lower competitive intensity after the regulatory ban on IIFL Finance. However, Muthoot Finance could now be at a higher risk of giving up gains and underperforming on the lifting of restrictions, Morgan Stanley (MS) said in a note on Thursday.

On Friday, Muthoot Finance was down 3% while Manappuram Finance shed 1%. (Reporting by Dimpal Gulwani; Editing by Rashmi Aich)