The Governor said that the Loan to Value (LTV) or small loans up to ₹2.5 lakh per borrower, will be revised to 85% from 75% earlier, including the interest component.
For example, if the value of gold is ₹1 lakh, instead of ₹75,000, a sum of ₹85,000 could be disbursed with the revision in LTV.
As per the draft rules that were released by the Central Bank earlier, the Loan-to-Value (LTV) ratio was capped at 75%, while the tenure for bullet payments is capped at 12 months. The draft rules also proposed NBFCs to set limits on gold loan portfolios.
Brokerage firm Jefferies had written in response to the guidelines that the tighter LTV norms can have some impact on growth and provisions, but gold loan rollover norms, though tighter, were not as harsh as feared.
Shares of Muthoot Finance are trading 6.4% higher at ₹2,442.9, while those of Manappuram Finance are trading 2.9% higher at 241.48. Shares of Manappuram are in the F&O ban, which means no new positions can be created in that stock.
Shares of IIFL Finance are trading 4.2% higher at ₹447.4.
First Published: Jun 6, 2025 12:41 PM IST
