Muthoot, IIFL Finance shares tumble up to 12% as RBI plans comprehensive guidelines on gold loans

Shares of select gold finance companies fell sharply on Wednesday after the Reserve Bank of India (RBI) said it will soon come out with comprehensive guidelines on gold loans.

"Loans against the collateral of gold jewellery and ornaments, commonly known as gold loans, are extended by regulated entities for both consumption and income-generation purposes. In order to harmonise guidelines across various types of regulated entities, to the extent possible, keeping in view their differential risk-bearing capabilities, we shall issue comprehensive regulations on prudential norms and conduct related aspects for such loans," RBI Governor Sanjay Malhotra said during his monetary policy speech.

Stocks such as Muthoot Finance Ltd, IIFL Finance Ltd and Manappuram Finance Ltd tanked up to 12 after the central bank announcement. Muthoot Finance shares dived 11.63 per cent to hit a day low of Rs 2,027.25 while IIFL slumped 8.40 per cent to Rs 305.55. Manappuram slipped 3.12 per cent to Rs 221.75.

Currently, loans taken against gold jewellery or ornaments — whether for daily consumption or to support small businesses — are governed by different rules depending on the lender. The RBI now aims to bring more consistency across all regulated entities (REs), such as banks and non-banking financial companies (NBFCs).