Gold loan stocks recover after RBI Governor clarifies regulatory stance 

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.

By 3:25 pm on the National Stock Exchange, Muthoot Finance had pared some losses to trade at ₹2,135.50, down 6.85 per cent from the previous close. This marked a recovery from the 10 per cent decline seen earlier in the day. Similarly, Manappuram Finance traded at ₹224.95, down 1.79 per cent, while Muthoot Microfin was at ₹130.26, down 1.69 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.

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.

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Published on April 9, 2025