Shares of Muthoot Finance Ltd plunged nearly 10% in Tuesday’s trade, emerging as one of the top losers on the NSE, after the Reserve Bank of India (RBI) announced plans to release comprehensive guidelines on gold loans. At 11:00 AM, the stock was trading at Rs 2,079.20, down 9.31% or Rs 213.45, compared to its previous close of Rs 2,292.65.
The day’s trading range showed weakness throughout, as the scrip slipped to a low of Rs 2,072.35, signaling bearish sentiment from investors. The market cap also dipped to Rs 833.06 billion, with average volume at 645.75K.
RBI gold loan regulation triggers sell-off
Investor sentiment turned negative shortly after RBI Governor Sanjay Malhotra, in the Monetary Policy Committee (MPC) press conference, announced that the central bank would be issuing comprehensive regulations for loans against gold jewellery and ornaments.
“Loans against the collateral of gold jewellery and ornaments are extended by regulated entities for both consumption and income-generation purposes. Prudential and conduct-related regulations have varied across different categories of regulated entities (REs). To harmonize these and address concerns, we will issue a comprehensive regulatory framework,” Malhotra said.
The draft guidelines are expected to be released later today for public comments. The RBI noted that the move aims to ensure uniform risk management and better governance, especially for non-banking financial companies (NBFCs) like Muthoot Finance and Manappuram Finance that hold a significant share of the gold loan market.
Why it matters
Muthoot Finance is India’s largest gold loan NBFC. Any tighter regulations on gold-backed lending, such as stricter loan-to-value ratios, higher capital buffers, or enhanced disclosure norms, could hurt its margins or affect lending growth. This uncertainty is weighing heavily on investor confidence.
Related RBI MPC developments
In addition to gold loan regulations, the RBI also announced several key decisions during its MPC meeting:
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Repo rate cut by 25 basis points to 6.00%
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Standing Deposit Facility (SDF) rate cut to 5.75%
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Marginal Standing Facility (MSF) rate reduced to 6.25%
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Monetary policy stance changed from neutral to accommodative
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CPI inflation for FY26 projected at 4%
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India’s real GDP growth estimate for FY26 revised to 6.5% from 6.7%
