Never said will tighten norms on loans against gold, says RBI Governor

Home loan EMIs set to fall post RBI's 25-bps repo rate cut on April 9

RBI Governor Sanjay Malhotra on April 9 clarified that he never said the central bank will tighten norms on loans against gold.

His statement comes amid fall in shares of Muthoot Finance, IIFL Finance, Manappuram Finance, Cholamandalam Investment as Malhotra said earlier on April 9 that the central bank will soon issue comprehensive guidelines on loans against gold.

"Have never said that gold loan norms will be tightened," said Malhotra in a post-monetary policy press conference in Mumbai.

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, the Governor said during his speech.

At closing on April 9, shares of Muthoot Finance recovered partially from 10% lower circuit, hit earlier in the day, to trade 7% lower. IIFL Finance shares also recovered nearly 6 percentage points to trade 2.5% lower at Rs 325 apiece.

Shares of Manappuram Finance closed 2% lower at Rs 224.81 after hitting day's low of Rs 221.76. Meanwhile, shares of Cholamandalam Investment closed 2% lower at Rs 1,433 after hitting day's low of Rs 1,390.

For IIFL Finance, gold forms 21% of total portfolio while for Manappuram and Muthoot Finance it stands at 50% and 98%, respectively.