Muthoot Finance's scrip soared 19.98 percent to Rs 129.10 -- its upper circuit limit on the BSE. Similarly, shares of Manappuram Finance shot up 19.80 percent to touch its highest trading permissible limit for the day at Rs 18.15.
     
"...it has been decided to raise the LTV (Loan-To-Value) ratio to up to 75 percent for loans against the collateral of gold jewellery from the present limit of 60 percent with immediate effect," the RBI said.
    
This, it said, has been done in view of the moderation in the growth of gold loan portfolios of Non-Banking Financial Companies (NBFCs) in the recent past.
     
The RBI further said the value of the jewellery for the purpose of determining the maximum permissible loan amount will be only the intrinsic value of the gold content therein and no other cost elements (like making charges) should be added thereto.
     
"The development is positive for gold loan companies like Muthoot Finance and Manappuram Finance, as earlier norm of 60 percent LTV had resulted in moderation of loan books for these companies," Angel Broking said in a report. "It also appears that regulator is now comfortable with the loan books of these NBFCs and want them to play an active role in monetization of idle gold in the country," the report said.

(Agencies)

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