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Shares of gold loan firms Muthoot Finance, IIFL Finance, and Manappuram Finance fell up to 9 percent after RBI Governor Sanjay Malhotra announced upcoming guidelines on gold loans.
Shares of gold financing companies fall.
RBI Gold Loan Guidelines New: Shares of gold loan firms Muthoot Finance Ltd, IIFL Finance Ltd, Manappuram Finance Ltd slipped up to 10% on Wednesday, April 9, after RBI Governor Sanjay Malhotra said the central bank will soon issue comprehensive guidelines on gold loans.
“RBI has been closely monitoring lending against collateral of gold over the last few years. It has also issued supervisory recommendations and cautionary advice to lending institutions, in light of irregularities and compliance gaps observed by the RBI in gold loan products. This announcement by the RBI illustrates RBI’s intent to exercise stricter supervision over gold loan products,” a banking & finance expert told News18.
Depending on the form of the proposed guidelines, this move is likely to increase compliance costs and burden on lending institutions primarily engaged in the business of lending against gold, he added.
Loans secured by gold jewelry and ornaments, commonly known as gold loans, are provided by regulated entities such as banks and NBFCs for both consumption and income generation purposes. To harmonize guidelines across these entities while considering their different risk-bearing capacities, we will issue comprehensive regulations on provisional norms and conduct-related aspects for these loans, the Governor stated during his speech.
The scrip of Muthoot Finance was trading at Rs 2099.75 apiece with a fall of 8.66 per cent around 11:30 AM, against the day’s opening at Rs 2300.10 apiece.
IIFL Finance’s shares fell 5 per cent to trade at Rs 315.50 apiece, against the day’s opening at Rs 328.90 apiece.
Manappuram Finance’s shares were also trading at Rs 223.10 apiece with a fall of 2.53 per cent. The scrip opened at Rs 228 apiece, against the previous day close at Rs 228.90 apiece.
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