Gold loan companies’ shares take a knock on prospect of new norms

The Reserve Bank of India (RBI) governor Sanjay Malhotra said on Wednesday it would issue comprehensive regulations on prudential norms and conduct related aspects for gold loans, sending gold loan company stocks sharply lower.

Shares of major gold loan companies traded significantly down by mid-day. Muthoot Finance, the industry leader, plunged 8.56 per cent to ₹2,096.40, while Manappuram Finance fell 2.33 per cent to ₹223.73, and Muthoot Microfin dropped 2.15 per cent to ₹129.65.

The selloff followed the RBI’s announcement that it would harmonise guidelines across regulated entities offering gold loans, which are secured against jewellery and ornaments for both consumption and income-generation purposes. The central bank cited the need for “comprehensive regulations on prudential norms and conduct related aspects” for such loans, considering the “differential risk-bearing capabilities” of lenders.