Muthoot Finance, Manappuram Shares Fall As RBI Flags Irregular Practices Among Gold Loan Lenders
Muthoot Finance shares fell as much as 3.71% and Manappuram Finance declined 3.45%.
(Source: NDTV Profit)
Gold loan financier stocks were trading mixed on Tuesday after the Reserve Bank of India flagged irregular practices among some supervised entities in granting loans against pledged gold ornaments and jewellery.
Muthoot Finance shares fell as much as 3.71%, Manappuram Finance declined 3.45%, while Cholamandalam Finance rose 2.51%, and IIFL Finance gained 4.26%.
The RBI found major deficiencies, including reliance on third parties for sourcing and appraising loans, valuation of gold without customer presence, and lack of due diligence and end-use monitoring. Issues such as lack of transparency during auctions and weaknesses in loan-to-value monitoring were also highlighted.
The RBI has instructed lenders to submit an action report within three months and warned that noncompliance would attract supervisory action. It also advised lenders to closely monitor their gold loan portfolios and ensure adequate controls over outsourced activities. The move comes amid rising concerns over gold loan businesses, with the RBI recently lifting restrictions on IIFL Finance's gold lending, previously imposed due to compliance issues.
