Muthoot & Manappuram Extend Rally After RBI Eases Gold-Loan Norms

Gold-loan NBFCs like Muthoot Finance and Manappuram Finance soared on June 9, 2025, after RBI announced its final guidelines, raising the LTV (loan-to-value) ratio to 85% for loans up to ₹2.5 lakh and simplifying procedures, sparking sharp market momentum.

What Did RBI Change?

• LTV increase: Up to 85% for gold loans ≤ ₹2.5 lakh; 80% for loans ₹2.5–5 lakh; 75% cap remains above ₹5 lakh .

• Easier access: Simplified paperwork, no credit checks for small loans, and end-use restrictions apply only under priority-sector lending .

• Protected borrowers: Stricter rules for renewals or top-ups—interest must be repaid and credit checks cleared; full fee disclosure (e.g., assaying, auction) required .

Highlighted sentence: “This is a significant step toward greater prudence, transparency, and borrower protection.”

Market Reaction

On June 9, gold-loan lenders extended their bullish run:

• Muthoot Finance surged ~3–4%, trading around ₹2,540—a fresh high .

• Manappuram Finance climbed ~2–3%, reaching ₹253–₹254 .

• Other players (IIFL included) registered gains between 2–7%, reflecting the sector-wide optimism.

Analysts noted that these final guidelines are milder than earlier proposals—and the regulatory parity places NBFCs on a level playing field with banks in LTV terms.

Why It Matters

1. Broader credit access: Higher LTV means borrowers can unlock more value from gold—especially small-ticket users.

2. Faster disbursals: Looser credit appraisal and reduced paperwork help streamline lending.

3. NBFC advantage: The relaxed norms are expected to support growth in smaller towns and rural areas, benefiting NBFC-led gold loans.

4. Transparency & compliance: Renewals need interest repayment and credit reforms, reducing risks and clarifying borrower costs.

What Analysts Say

• Motilal Oswal comments that the final guidelines are “milder” than drafts, with only a “marginal near‑term impact” and no threat to medium‑term growth for gold-finance NBFCs.

• Department of Financial Services (DFS) proposed exempting loans < ₹2 lakh, and supporting faster rollout—market responded with a 7% gain in Muthoot, 3% in Manappuram .

Bottom Line

• Clear winner: Gold‑loan NBFCs benefited as LTV soared to 85% and lending rules relaxed.

• Investor boost: Shares of Muthoot and Manappuram jumped 2–4% on June 9, continuing their rally.

• Sector outlook: Enhanced liquidity, lower compliance, and transparent costs make small‑ticket gold loans attractive—and viable amid cautious borrowing.

Important highlighted sentence: “This is a significant step toward greater prudence, transparency, and borrower protection, benefiting all NBFCs, particularly gold loan providers.”