Gold loan company stocks partially recovered from their earlier steep losses on Wednesday after Reserve Bank of India (RBI) Governor Sanjay Malhotra clarified that the central bank was not planning to tighten regulations on gold loans but rather to harmonise existing guidelines.
At closing on the National Stock Exchange, Muthoot Finance had pared some losses to end at ₹2,137.20, down 6.78 per cent from the previous close. This marked a recovery from the 10 per cent decline seen earlier in the day. Similarly, Manappuram Finance closed at ₹224.81, down by 1.86 per cent, while Muthoot Microfin was at ₹130.98, down 1.15 per cent - both showing improvement from their midday lows.
The recovery came after Malhotra addressed market concerns during the post-policy press conference. “In my statement I never said tightening. I used the word harmonisation; the markets are reading it based on emotions,” the RBI Governor stated. “Let’s wait for the guideline which will be issued soon. To our mind, there is no tightening. It is only a rationalisation, it is broadly an extension of... whatever is there on the conduct side primarily, whatever were the guidelines for NBFCs have been extended now to banking sector also.”
The clarification helped ease investor fears after the RBI’s initial announcement about issuing comprehensive regulations on prudential norms for gold loans, which triggered a sell-off in gold loan company stocks. The central bank had earlier stated it would harmonise guidelines across regulated entities offering gold loans for both consumption and income-generation purposes.
VP Nandakumar, Managing Director & CEO of Manappuram Finance Limited, welcomed the RBI’s announcement: “The RBI’s decision to harmonize gold loan rules and regulations will be beneficial for all stakeholders, especially gold loan NBFCs, as there is currently no level playing field. NBFCs have always been at a disadvantage compared to banks, as the latter have access to cheaper funds, are eligible to offer gold-based agricultural loans, enjoy higher loan-to-value ratios, and benefit from favourable renewal policies. This scenario will change following the central bank’s latest decision, which we wholeheartedly welcome.”
Nandakumar also commented on the broader monetary policy decision: “The RBI MPC’s decision to cut the repo rate to 6 per cent and shift its stance to ‘accommodative’ is aimed at reviving the country’s GDP growth. At present, the central bank sees some downside risks to growth, as a result of which it has reduced the FY26 GDP growth forecast to 6.5 per cent from 6.7 per cent.”
The RBI’s policy announcement earlier in the day included a 25 basis point cut in the repo rate to 6.00 per cent and a shift in monetary policy stance from neutral to accommodative, signaling support for economic growth amid easing inflation concerns.
Despite the governor’s reassurances, gold loan stocks remained significantly in the red for the day, suggesting lingering investor uncertainty about the potential impact of the upcoming regulatory guidelines on the sector.