Wednesday 18 September 2013

Muthoot, Manappuram Finance extends fall on RBI new norms

Muthoot Finance was down nearly 6% at Rs 98, while Manappuram Finance down 5% at Rs 14.75 on BSE.

Shares of gold finance companies such as Muthoot Finance and Manappuram Finance are under pressure second day in a row after the Reserve Bank of India (RBI) issued gold loan guidelines.

Muthoot Finance has dipped 5.5% at Rs 97.95 on BSE. The stock had tanked over 8% yesterday. Manappuram Finance is locked in lower circuit of 5% at Rs 14.75 with no buyers are seen on the counter.

In a notification on Monday, RBI said, the recommendations of the working group, in so far as they relate to non banking finance companies (NBFCs) lending against the collateral of gold jewellery, have been broadly accepted by the bank.

The notification said that NBFCs shall not issue misleading advertisements like claiming the availability of loans in a matter of 2-3 minutes.

High value loans of one lakh and above must only be disbursed by cheque, while borrowers' PAN mandatory for loan over five lakh rupees, the RBI said.

The RBI also said, the loan-to-value (LTV) ratio for loans against jewellery would continue to be at 60%. The RBI directed the NBFCs to have board-approved policies on auction of gold jewellery that ''are transparent to the borrowers and adequate prior notice has been issued to them.”

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