June 06, 2025: Shares of key gold loan NBFCs like Muthoot Finance, Manappuram Finance, and IIFL Finance saw significant intraday gains on June 6, 2025, following RBI Governor Sanjay Malhotra’s announcement revising the Loan-to-Value (LTV) ratio for small-ticket gold loans.
In a major policy update during the RBI’s Monetary Policy Committee (MPC) press conference, Governor Malhotra stated that the LTV ratio for gold loans up to ₹2.5 lakh will be raised to 85% from the earlier 75%, and this will include the interest component as well.
This means that for every ₹1 lakh worth of pledged gold, borrowers can now receive up to ₹85,000, compared to ₹75,000 earlier—a move that is expected to enhance credit flow in the small-loan segment.
📈 NBFC Stocks React Positively
- Muthoot Finance Ltd. surged as much as 8%, and was last seen trading 6.4% higher at ₹2,442.90.
- Manappuram Finance Ltd. rose 2.9% to ₹241.48, though the stock remains under the F&O ban, restricting fresh position creation.
- IIFL Finance Ltd. gained 4.2%, trading at ₹447.40.
This positive momentum indicates investor optimism toward higher disbursal potential under the relaxed LTV norms.
🏦 Context: Draft Rules Still in Focus
Earlier, the RBI had proposed tighter regulations in its draft guidelines, capping the Loan-to-Value ratio at 75% and restricting bullet repayment tenures to 12 months. The draft also recommended NBFCs to place internal caps on their gold loan portfolios.
📊 Brokerages Remain Cautious
In response to the draft, brokerage firm Jefferies noted that while stricter LTV norms could impact growth and provisioning mildly, the overall gold loan guidelines were “not as harsh as initially feared.”
The latest revision to the LTV for smaller loans seems to offer a middle ground, supporting borrowers without significantly disrupting NBFC operations.