Gold loan companies like Muthoot Finance, Manappuram Finance, and IIFL Finance saw sharp gains on June 6 after the Reserve Bank of India announced a key change: the Loan-to-Value (LTV) ratio for gold loans up to ₹2.5 lakh has been increased from 75% to 85%. This move is expected to benefit small borrowers, including households and micro-enterprises.
If someone pledges gold worth ₹1 lakh, they can now get a loan of up to ₹85,000, compared to ₹75,000 earlier. This makes borrowing easier for those needing quick, small-ticket loans backed by gold.
Following the announcement:
The RBI Governor, Sanjay Malhotra, also mentioned that the final guidelines for this change will be released soon, likely by Monday.
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Just a week ago, the Ministry of Finance urged the RBI to ensure that small borrowers were not negatively impacted by stricter lending rules. The ministry, under Finance Minister Nirmala Sitharaman, worked closely with the RBI to provide relief to vulnerable borrowers.
With the RBI’s decision to raise the LTV cap on small gold loans, borrowers get easier access to credit, and gold loan stocks like Muthoot and Manappuram are reaping the rewards. This move is not just good news for investors, but a meaningful step for financial inclusion at the grassroots level.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
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Published on: Jun 6, 2025, 2:55 PM IST
Kusum Kumari
Kusum Kumari is a Content Writer with 4 years of experience in simplifying financial market concepts. Currently crafting insightful content at Angel One, She specialise in breaking down complex topics into easy-to-understand pieces, blending expertise in market fundamentals and technical analysis.
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