Credit Rating

June 30, 2026 The Manager, The Manager, The Manager, The Manager, Listing Department, Listing Department, Listing Department, Listing Department, BSE Limited, The National Stock India International Exchange NSE IFSC Limited Phiroze Jeejeebhoy Exchange of India Ltd., (IFSC) Limited Unit-1201, 12thFloor, Towers, Exchange Plaza, 5th Floor, 1st Floor, Unit No. 101, The Brigade International Dalal Street, Plot C/1, G Block, Signature Building No. 13B, FinancialCentre, Block- Mumbai 400 001. Bandra - Kurla Complex, Road 1C, Zone 1, GIFT SEZ, 14, Road 1C, Zone 1, BSE Scrip Code: 532636 Bandra (E), GIFT City, Gandhinagar, GIFT SEZ, GIFT City, Mumbai 400 051. Gujarat – 382050 Gandhinagar, Gujarat – NSE Symbol: IIFL India INX Symbol: 500058 382355 Subject: Assignment of Credit Rating by Moody's Ratings Dear Sir/ Madam, Pursuant to the provisions of Regulations 30 and 51 readwithSchedule III of the Securitiesand Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations, 2015, as amendedfrom time to time,we hereby inform you that Moody'sRatings (“Moody’s”), the credit rating agency, has assigned the following credit rating to IIFL Finance Limited (“the Company/ Issuer”) and the existing Global Medium Term Note Programme (“GMTNProgramme”) of the Company. Rating Type Rating Corporate Family Rating/Company Rating Ba3 Existing GMTN Programme (USD 1 Billion) (P)Ba3 The rating issuedby Moody’sfor the Company is enclosed herewith as Annexure. Kindly take the same on record and oblige. Thanking you, For IIFL Finance Limited Samrat Sanyal Company Secretary & Compliance Officer ACS-13863 Email Id: csteam@iifl.com Place: Mumbai IIFL Finance Limited CIN No.: L67100MH1995PLC093797 Corporate Office – 802, 8thFloor, Hub Town Solaris, N.S. Phadke Marg, Vijay Nagar, Andheri East, Mumbai 400069 Tel: (91-22) 6788 1000 .Fax: (91-22)6788 1010 Regd. Office– IIFL House, Sun Infotech Park, Road No. 16V, Plot No. B-23, Thane Industrial Area, Wagle Estate, Thane– 400604 Tel: (91-22) 41035000. Fax: (91-22) 25806654E-mail: csteam@iifl.com Website: www.iifl.com Annexure Rating Action: Moody's Ratings assigns Ba3 corporate family rating and (P)Ba3 GMTN program rating to IIFL Finance Limited; outlook stable 30 Jun 2026 Singapore, June 30, 2026 -- Moody's Ratings (Moody's) assigns a Ba3 long-term corporate family rating (CFR) to IIFL Finance Limited (IIFL Finance). At the same time, we have assigned (P)Ba3 long-term foreign-currency senior secured rating to IIFL Finance's USD1 billion Global Medium Term Note (GMTN) program. The rating outlook is stable. RATINGS RATIONALE IIFL Finance's Ba3 rating reflects its well-established retail lending franchise in India, which supports strong pre-provisioning profitability. Its asset-light business model and increasing shift towards secured lending support its capitalisation and long-term loss performance. These strengths are somewhat balanced by higher earnings volatility and asset risks from its exposure to subprime borrowers. The rating also considers its reliance on wholesale funding similar to industry peers, although this risk is mitigated by the company's well diversified borrowing sources and consistent refinancing track record. The stable outlook reflects our expectation that its credit profile will remain stable over the next 12–18 months. IIFL Finance has over two decades experience in retail lending in India. Its robust digital infrastructure and wide distribution network underpin customer acquisition, underwriting and collections. The business model has evolved towards more capital-efficient growth, with increasing use of co-lending and direct assignment. The loan mix also continues to shift towards secured lending, with growth led by gold finance (46% of on balance sheet loans), home loans (29%) and secured small business loans (9%) supporting more stable loss performance over time. Asset quality has improved in recent years, although it remains exposed to volatility given the company's focus on subprime borrowers. The problem loans ratio declined to 1.5% as of March 2026 from 2.2% in March 2025, partly driven by the sale of problem loans to asset reconstruction companies. That said, in line with industry peers, asset risk has increased in small-ticket home loans, small business loans, microfinance and unsecured segments over the past two years. Profitability has also improved and is supported by strong pre-provisioning profits, although reported earnings are more volatile. Net income to average managed assets increased to 2.3% in fiscal 2026 from 1.6% in fiscal 2025, driven by higher income from off balance sheet sale transactions, which offset margin compression from higher funding costs. However, these gains introduce earnings volatility because they depend on forward-looking assumptions and may reverse if actual cash flows differ from expectations. We expect IIFL Finance to maintain steady capitalization by raising new equity capital as strong loan growth outpaces internal capital generation. Its consolidated tangible common equity to tangible managed assets ratio declined to around 15.6% as of March 2026 from 18.4% a year earlier, reflecting the pace of balance sheet expansion. The company's increasing use of off-balance sheet structures supports capital-efficient growth. However, capital flexibility is constrained by limited fungibility across group entities, which may restrict the ability to deploy capital efficiently. The company's reliance on wholesale funding and modest on-balance sheet liquidity exposes it to refinancing risk. However, this risk is mitigated by its diversified funding profile, which includes domestic and international banks, capital markets, securitization, and co-lending channels, supported by a consistent execution track record. In addition, its gold loan portfolio comprises highly liquid assets with predictable cash flows, which supports liquidity. The (P)Ba3 senior secured rating on the GMTN program is in line with the company's Ba3 CFR given that secured debt forms the predominant portion of the company's borrowings. The notes issued under the program constitute the issuer's direct, general and unconditional obligations and will be secured by, among other things, a first-ranking pari-passu charge over all receivables/assets, including the issuer's accounts, operating cashflows, current assets, book debts, loans and advances and receivables, both present and future, but excluding assets that are charged exclusively to National Bank for Agriculture and Rural Development (NABARD), National Housing Bank (NHB), Small Industries Development Bank of India (SIDBI) or any other governmental authority, in relation to the facilities extended by each of the respective agencies. ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) CONSIDERATIONS The rating incorporates IIFL Finance's ESG considerations, as per our General Principles for Assessing Environmental, Social and Governance Risks methodology. The company faces moderate social and governance risks, and low environmental risks. The Governance Issuer Profile Score (IPS) of G-3 reflects risk management framework broadly aligned with its risk appetite and industry practices, though tempered by its relatively fast asset growth, lending focus on segments vulnerable to economic cycles and modest on-balance-sheet liquidity. It also captures risks relating to compliance & reporting practices, which we expect to improve over time. Overall, the Credit Impact Score (CIS) of CIS-3 indicates that ESG Considerations have limited impact on the current credit rating with potential for greater negative impact over time. FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS We could upgrade IIFL Finance's ratings if the company improves its TCE/TMA ratio to above 20% and maintains its net income to average managed assets above 2.5% on a sustained basis, while maintaining steady asset quality. We will downgrade IIFL Finance's rating if its capitaliza [Showing first 8,000 characters — download PDF for full document]