Shares of NBFCs Muthoot Finance and Manappuram Finance surged in trade in what was an otherwise weak session for other gold financier IIFL Finance amid the RBI crackdown. Muthoot Finance share price jumped over 13% in trade today to hit an high of Rs 1,527 in the morning trade on NSE, while Manappuram Finance share price jumped close to 5% to hit an intraday high of Rs 199.
The move in Muthoot Finance and Manappuram Finance comes in amid a 20% decline in IIFL Finance share price after the RBI barred it from issuing any fresh gold loans. Both Muthoot Finance and Manappuram Finance operate in the similar business as IIFL and are likely to benefit from the RBI’s decision as the demand for gold loans will shift towards the two NBFCs, experts believe.
The inspection by RBI on IIFL Finance uncovered troubling deviations in the assaying and certification process of gold purity and net weight, both during loan sanctioning and auction proceedings in the event of defaults. Additionally, breaches in Loan-to-Value ratio, excessive cash disbursals and collections surpassing statutory limits, non-compliance with standard auction protocols, and lack of transparency in customer account charges were identified as key areas of concern.
