Shares of Muthoot Finance Limited surged 2% after the Reserve Bank of India (RBI) announced a rollback in risk weights for bank financing to NBFCs and microfinance loans, a move that is expected to unlock additional liquidity and boost lending capacity in the sector. The relaxation of risk weight norms will improve credit flow, benefiting NBFCs like Muthoot Finance, which specializes in gold loans and financial services.
RBI’s Move to Ease Liquidity for NBFCs
The RBI’s decision reduces the risk weight on bank lending to NBFCs rated A and above, making it easier for financial institutions to lend. This move comes after a previous tightening in November 2023, which had slowed down lending activity across the NBFC and microfinance sectors. By reducing the capital requirements for banks, this policy change is expected to enhance credit availability and liquidity for key players in the sector.
Muthoot Finance Secures RBI Approval for Expansion
In a separate development, Muthoot Finance Limited has received RBI approval to open 115 new branches across multiple locations. The regulatory approval, granted on February 25, 2025, will allow the company to further strengthen its presence in India’s financial sector.
The expansion plan aligns with Muthoot Finance’s long-term growth strategy, ensuring broader customer outreach while reinforcing its market leadership in the gold loan segment. According to the company’s exchange filing under Regulation 30 of SEBI (LODR) Regulations, 2015, all new branches will comply with security and operational guidelines mandated by the RBI, ensuring safe financial transactions for customers.
The RBI’s clearance for expansion signals regulatory confidence in Muthoot Finance’s business model and operational standards. The company will now proceed with the implementation of new branches, further enhancing accessibility to financial services across various regions.
