Mumbai: Share prices of gold loan finance companies on Thursday soared up to 20 percent on an RBI report recommendation that companies be allowed to lend 75 percent against the value of gold pledged, against 60 percent at present.
Manappuram Finance surged 19.97 percent to touch the upper circuit limit of Rs 40.55 on the BSE.
Muthoot Finance zoomed up by 17.87 percent during the day and finally closed at Rs 230, up 10.21 percent.
"Shares of Manappuram Finance and Muthoot Finance rose sharply on RBI panel's proposal that gold loan firms be allowed to lend 75 percent against the value of gold pledged, against 60 percent now," Milan Bavishi, Head Research, Inventure Growth & Securities said.
"Any kind of increase in loan to value ratio works in benefit for these companies as it helps to increase revenue potential," Bavishi said.
A draft report by a working group set up by the RBI under the chairmanship of K U B Rao has recommended a review of the cap on the loan-to-value ratio of gold loan non-banking finance companies (NBFCs) to 75 percent.
Currently, the ratio for gold loans by NBFCs is capped at 60 percent.
"As gold loan NBFCs have already braced for conforming to all regulatory stipulations, the 'loan to value ratio' can be broadly increased to 75 percent," said a report of the Working Group on Gold.
PTI
First Published: Thursday, January 03, 2013, 18:04