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Muthoot, IIFL Finance Shares Decline Sharply Following RBI’s Announcement on Gold Loan Guidelines
Shares of gold loan-focused non-banking financial companies (NBFCs) such as Muthoot Finance Ltd. and IIFL Finance Ltd. saw a significant decline of up to 10% on Wednesday, April 9, after Reserve Bank of India (RBI) Governor Sanjay Malhotra announced the upcoming release of comprehensive regulatory guidelines for gold loans.
During his monetary policy address, the RBI Governor stated:
“Loans against the collateral of gold jewellery and ornaments, commonly known as gold loans, are extended by regulated entities including banks and NBFCs for both consumption and income-generation purposes. To harmonise regulations across different categories of lenders, while accounting for their varying risk-bearing capacities, the RBI will issue detailed norms covering provisioning as well as conduct requirements for such loans.”
The announcement triggered a sharp sell-off in stocks of companies with high exposure to gold loans. Muthoot Finance, where gold loans comprise nearly 98% of total Assets Under Management (AUM), saw its shares decline by 10% to ₹2,063.4, down nearly 15% from its 52-week high of ₹2,435.
IIFL Finance, which has approximately 21% of its AUM in gold loans, experienced a 7.5% drop in share price, trading at ₹308.45. The stock has fallen over 43% from its 52-week high of ₹560.
Shares of Manappuram Finance, another key player in the gold loan segment with 50% of its AUM linked to gold, also slipped 3% to ₹222.25 following the RBI announcement. The stock is currently under the Futures & Options (F&O) trading ban, meaning no new derivative positions can be taken in the stock.
Market participants are now closely watching the RBI’s upcoming regulatory framework, which could impact business operations and profitability in the gold loan sector.
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