RBI tightens the screws on gold NBFCs yet again; stocks plunge

Stocks

oi-Sneha

By Sneha B K

Published: Wednesday, April 18, 2012, 10:48 [IST]

Close on the heals of new KYC norms and new loan to value norms, the Reserve Bank of India has decided to intervene once again in norms for gold NBFC's, by asking banks to reduce exposure to any single gold loan NBFC from the existing 10% to 7.5% of their capital funds.

Shares of the gold loan NBFCs like Muthoot Finance dropped 0.94% and Manappuram dropped 2.04% on BSE at 10.10 am IST.

"Banks should have an internal sub-limit on their aggregate exposure to all such NBFCs, having gold loans to the extent of 50 per cent or more of their total financial assets, taken together," the RBI said in the statement.

RBI has constituted a Working Group to undertake a detailed study of gold demand, trends in gold prices and lending by NBFCs against gold.

RBI's concerns over gold import and after noticing surge in the growth marked by NFBCs in the recent years, both in terms of their balance sheet size and physical presence.

Earlier, the RBI had asked NBFC gold loan companies to reduce their Loan to value (LTV) to 60% for loans against collateral of gold jewellery.

GoodReturns.in