BackMuthoot, Manappuram shares surge on RBI norms
Manappuram rises 19.8% to `18.15 and Muthoot Finance jumps 19.9% to `129.10
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Mumbai: Shares of gold loan lenders Muthoot Finance Ltd and Manappuram Finance Ltd rose as much as 20% on Thursday, a day after the Reserve Bank of India (RBI) relaxed lending norms for such firms.
At 9.46am, the Manappuram stock was trading at ₹ 18.15 on BSE, up 19.8% from its previous close, while Muthoot Finance rose 19.98% to ₹ 129.10. The BSE Sensex was trading at 20,718 points, down marginally. Both stocks touched their upper circuit in intra-day trading.
On Wednesday, RBI increased the loan-to-value (LTV) ratio for non-banking financial companies (NBFCs) which lend money using gold as a collateral.
In a notification, the central bank said these companies can give loans of as much as 75% of the value of the gold kept as collateral, compared with 60% earlier.
LTV is the amount of money that can be lent against a specific value of gold. For instance, if the LTV is 75%, for every ₹ 100 worth of gold, firms can give a loan of ₹ 75.
“In view of the moderation in the growth of gold loan portfolios of NBFCs in the recent past, and also taking into consideration the experience so far, it has been decided to raise the LTV ratio to up to 75% for loans against the collateral of gold jewellery from the present limit of 60% with immediate effect," RBI said.
Earlier, an RBI working group under the chairmanship of K.U.B. Rao, an adviser in the central bank’s department of economic and policy research, had recommended a higher LTV.
RBI also clarified that “making charges" cannot be included in the value of gold to be kept as collateral.
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