Shares of Manappuram Finance were trading lower by almost 7% at Rs 30.10 and Muthoot Finance was down almost 12% at Rs 122.85 at 1.15 PM IST.
The Reserve Bank of India (RBI) on Monday issued a fresh set of guidelines for Non Banking Finance Companies who lend against gold jewellery as a collateral.
Accordingly, the RBI has said that NBFCs must put in in place a Board approved policy for lending against gold that should have adequate steps to ensure that the KYC guidelines stipulated by RBI are complied with and to ensure that adequate due diligence is carried out on the customer before extending any loan.
“The policy shall also cover putting in place adequate systems for storing the jewellery in safe custody, reviewing the systems on an on-going basis, training the concerned staff and periodic inspection by internal auditors to ensure that the procedures are strictly adhered to. As a policy, loans against the collateral of gold should not be extended by branches that do not have appropriate facility for storage of the jewellery,” the RBI stated in a press release.
The new guidelines comes close on the heels of the RBI norms issued a few days ago that restricted the loan to gold value to 60%. This is likely to hit gold loan companies that Muthoot Finance and Manappuram, which have witnessed robust growth in the last few quarters.