Manappuram Finance up 16% after RBI proposal on gold loans

Shares in gold loan providers such as Manappuram Finance soared after an RBI report proposed increasing the loan-to-value, or LTV, ratio to 75 percent from 60 percent currently.

The ratio is an important tool that can vary the quantity of gold loans which a company can provide to customers.

[caption id="attachment_576975" align="alignleft" width="380"] Muthoot Finance shares were up 9 percent, while Manappuram Finance rose 16 percent. Reuters[/caption]

"The proposals to increase LTV and to use cheques for high-value transactions are positive, but a cap on lending rates and restrictions on NCD (non-convertible debentures) will affect gold-loan NBFCs' profitability," Kotak Securities said in a note.

Muthoot Finance shares were up 9 percent, while Manappuram Finance rose 16 percent.

Shares in Titan Industries, which makes gold jewellery, were down 1 percent on concerns over rising costs after the government said it will make importing gold costlier.

Reuters