Shares of gold financing company, Muthoot Finance fell as much as 6% on Friday, April 11, after the Reserve Bank of India published draft rules on lending against gold collateral on Wednesday, as promised by the RBI Governor Sanjay Malhotra during his monetary policy statement. Shares of its peers IIFL Finance fell 1%, while Manappuram shares are in the green.

As per the draft rules, the Loan-to-Value (LTV) ratio is capped at 75%, while the tenure for bullet payments is capped at 12 months. The draft rules also propose NBFCs to set limits on gold loan portfolios.

Brokerage firm Jefferies believes that the tighter LTV norms can have some impact on growth and provisions, but gold loan rollover norms, though tighter, are not as harsh as feared.

It added that Gold NBFCs are a good defensive hedge in the current environment and prefers Muthoot Finance among them with a price target of ₹2,615.
Morgan Stanley has an “equalweight” rating on Muthoot and believes that the stock could be under pressure in the near-term. It added that Manappuram could be better placed as a stock, given Bain Capital’s open offer price. It has an “equalweight” rating on Manappuram as well.

CLSA wrote in its note that the guidelines are marginally disruptive for growth and its only building loan growth between 12% and 15% for Muthoot and Manappuram for financial year 2026 and 2027.

Kotak Institutional Equities has downgraded Muthoot Finance to “add” from its earlier rating of “buy” and has also trimmed its price target to ₹2,250 from ₹2,400 earlier. It has cut its earnings estimates for Muthoot by 10%.

While it does await final norms, growth and margin assumptions have been moderated and although it remains constructive on the gold loan business, the regulatory overhang will temper stock price performance.

Shares of Muthoot Finance are down 6% at ₹2,007, while those of IIFL Finance are trading 1.1% lower. Manappuram Finance shares are trading 0.8% higher. Manappuram shares are in the F&O ban, which means no new positions can be created on these stocks.

Banking stocks which have a gold loan portfolio like CSB Bank and Federal Bank are also trading with gains of 1%.