Gold-loan NBFCs surge to 52-week highs as RBI’s LTV boost lifts sentiment

Stocks of non-banking financial companies (NBFCs) specialising in gold loans surged on Monday after the Reserve Bank of India (RBI) released its final guidelines on gold loans last Friday. The revised rules include an increase in the loan-to-value (LTV) ratio for gold loans under ₹2.5 lakh from 75% to 85%, along with a relaxation of procedural norms. These changes will come into effect from April 1, 2026.

In the context of gold loans, LTV refers to the percentage of the gold’s appraised market value that a lender is willing to offer as a loan. 

Leading the surge was Muthoot Finance and Manappuram Finance , both of which recorded 52-week highs in intraday trading, touching ₹2,548 and ₹ 266.76, respectively. Muthoot Finance closed at ₹2542.90, a 3.95% increase since previous close, and recorded a market capitalisation of ₹1.02 lakh crore. Manappuram Finance closed at ₹265.42, a 7.21% rise from its previous closing and has surged by 10% in the past month.

Prior to the LTV revision, analysts had a ‘Buy’ rating on Muthoot Finance shares with a target price of ₹2,390, whereas they had a ‘Hold’ rating for Manappuram Finance. Following today’s rally, Muthoot is trading at 3.8x, way over its long-term price-to-book average multiple of 2x and Manappuram is trading at 1.8x above its long-term average 1.5x.

RBI’s final guidelines for bank loans are seen as a relief for NBFCs as they now expect a boost in disbursements and intensify competition across the lending ecosystem. The guidelines seem to aim accessibility of gold loans to low-income and rural borrowers by dismissing detailed income assessments or credit checks for gold loans below ₹2.5 lakh.

Additionally, the RBI has introduced stricter rules for loan renewals, requiring borrowers to repay interest and undergo fresh credit checks before a renewal or top-up. Lenders must also provide clear disclosures of all associated charges, such as gold essaying and auction fees in the loan documentation. These measures ensure prudence, transparency, and borrower protection, benefitting all NBFCs, especially gold loan providers.

These guidelines will apply uniformly to all the regulated entities doing gold lending, including banks, SFBs, and NBFCs by April 2026.