RBI’s Big Gold Boost: Muthoot, Manappuram Share Price Surge Up to 7% as LTV Raised to 85%

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.

What Does the New Rule Mean?

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.

Gold Stocks Rally 

Following the announcement:

• Muthoot Finance share price surged 7.6% to ₹2,470.
• Manappuram Finance share price rose 5% to ₹246.44.
• IIFL Finance share price jumped 5.4% to ₹452.45.
• Kalyan Jewellers share price also gained 2.5%, hitting ₹563.95.

The RBI Governor, Sanjay Malhotra, also mentioned that the final guidelines for this change will be released soon, likely by Monday.

Read More: Why Bajaj Finance, SBI Card, and RBL Bank Shares Soared Up to 4%?

Government Push Behind the Scenes

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.

Conclusion

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.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.