Gold Loan Co's - New Shine on

Shares of gold loan financing firms like Manappuram Finance and Muthoot Finance surged up to 17% in three trading sessions on the BSE after the Reserve Bank of India (RBI) announced revised guidelines for gold loans. The key change is an increase in the Loan-to-Value (LTV) ratio to 85% for loans up to ₹2.5 lakh, and 80% for those between ₹2.5 lakh and ₹5 lakh, while keeping it at 75% for amounts above ₹5 lakh. This is expected to boost borrowing capacity for customers and enhance demand for gold loans. Gold loans form 50% and 98% of their total portfolios, respectively for

& . The RBI’s move has been seen as positive for the sector, simplifying documentation for smaller loans and easing credit checks, thereby supporting growth in this key business segment. Added to that, Bain Capital has taken a controlling stake in Manappuram earlier this year, and also have an open offer at ₹236. Also, with Gold prices internationally finding a base and rallying in past few months, and strategic investors entering the businesses aided with easing RBI norms, the sector will perform well over the coming quarters.