Muthoot, Manappuram Finance Shares Surge After RBI's Final Gold Loan Regulations
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Gold financing firms extended their gains on Monday, June 9, after the Reserve Bank of India (RBI) issued its final guidelines on gold loans
Gold financing firms extended their gains on Monday, June 9, after the Reserve Bank of India (RBI) issued its final guidelines on gold loans, which include an increased loan-to-value (LTV) ratio of up to 85 per cent.
The new norms allow borrowers to access up to 85 per cent of their gold's value for loans up to Rs 2.5 lakh and 80 percent for loans between Rs 2.5 lakh and Rs 5 lakh. Loans above Rs 5 lakh will continue to carry an LTV cap of 75 per cent, inclusive of interest. The guidelines also simplify paperwork for smaller loans, waive credit checks, and limit end-use restrictions to priority sector lending.
Stricter rules will apply to renewals and top-ups: borrowers must repay interest and meet credit checks before a renewal is approved. Lenders will also be required to disclose all charges upfront, including gold assaying and auction fees, enhancing transparency and borrower protection—measures expected to benefit NBFCs engaged in gold lending.
These guidelines will apply uniformly to all regulated lenders—including banks, small finance banks, and NBFCs—and must be fully implemented by April 2026.
At 11:30 am, shares of Muthoot Finance were up 3.8 per cent at Rs 2,540, while Manappuram Finance was trading 2.3 per cent higher at Rs 253.25. Over the past month, these gold loan providers have rallied 14 per cent and 10 per cent, respectively.
Motilal Oswal noted that while there may be a slight impact on disbursement LTVs for gold loan NBFCs, this can be offset by encouraging borrowers to repay interest periodically and by rolling out shorter-tenure products. The brokerage added that regulatory parity in LTV norms could intensify competition between banks and NBFCs.
Despite these changes, Motilal Oswal's ratings and estimates for Muthoot Finance, IIFL Finance, and Manappuram Finance remain unchanged, as the final guidelines are not expected to significantly impact gold loan growth over the medium to long term.
Morgan Stanley sees Muthoot Finance and Manappuram Finance as key beneficiaries of the updated guidelines. The brokerage reiterated its 'equal-weight' stance on both lenders, while maintaining an 'overweight' view on Shriram Finance and Bajaj Finance, which could also benefit from the RBI's norms.
Morgan Stanley expressed greater optimism for Muthoot Finance, citing its strong earnings outlook for Q1 and FY26 as a potential catalyst for further upside. However, it noted that Manappuram Finance's share price could remain capped around the Rs 236 open offer price set by Bain Capital until that transaction concludes.
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