"We expect the profitability of these NBFCs to decline by nearly 0.75 per cent and their loan books to decline in the near term," Crisil said in a note.
On Monday, RBI tightened existing norms for extending loans against the gold jewellery. Accordingly, gold jewellery accepted as a collateral will be valued at the average of the closing price of 22-carat gold for the preceding 30 days, as quoted by the Bombay Bullion Association (BBA).collatera
The Crisil report said such a uniform valuation methodology for jewellery will limit the flexibility to offer loans at higher effective loan-to-value ( LTV) ratios, and prompt customers to move to other lenders.
However, the guidelines would also promote orderly, sustainable growth in the sector over the long term, it said.
As per the guidelines, high-value loans of Rs 1 lakh and above must be disbursed only by cheque. NBFCs having more than 1,000 branches must take RBI's prior approval for adding more branches. Crisil said both the directives will constrain the growth of gold loan NBFC sector.
Another new norm is that while auctioning the gold, the NBFC should declare a reserve price for the pledged ornaments, which should not be less than 85 per cent of the previous 30 day average closing price of 22 carat gold as declared by BBA.
"The desire to limit delinquencies to avoid auctioning will lead to higher investments in collection systems. As a combined impact of these developments, the gold loan NBFCs' return on assets (RoA) is expected to decline by nearly 75 basis points," the report said.
The report said the NBFCs will take around six quarters to fully transit to the new landscape envisaged by these norms.
"During this period they will face challenges in terms of growth, asset quality and profitability."
However, in the long term, enhanced transparency will strengthen the confidence of stakeholders, the report said.
The guidelines are expected to keep up the asset quality and profitability pressures on the NBFCs in near term, the report said.