Stocks of gold loan companies were buzzing this morning on the bourses. The scrips of Muthoot Finance and Manappuram Finance were up almost 20 per cent in morning trades. Muthoot Finance was up Rs 21.50 to Rs 129 while Manappuram Finance moved up by Rs 3 to Rs 18.
The interest in these stocks follows a regulatory relaxation, announced late last night.
The RBI has allowed a higher loan-to-value (LTV) ratio for NBFC gold loan companies. The ratio has been hiked to 75 per cent from 60 per cent. This means they will now be able to give loans up to 75 per cent of the value of jewellery pledged as against 60 per cent earlier. The RBI had a year ago tightened the norms as part of risk mitigation measures since these companies grew their business rapidly and gold prices were touching new highs.