NBFCs cool to RBI diktat on gold loans

Bangalore, May 28, 2013, DHNS:,

May 28 2013, 03:36 ist
updated: May 28 2013, 23:29 ist

A day after the Reserve Bank of India (RBI) issued a notification placing restrictions on gold loan NBFCs in terms of lending, the Association of Gold Loan Companies (AGLOC) said that they won't be affected by it.

In a statement on Tuesday, the President of AGLOC, George Alexander Muthoot said, “AGLOC would like to inform all its stakeholders that gold loan NBFCs lend against household used jewellery only and no advances against have been granted against gold coins, bullion or gold bars etc.”

He however said the RBI could have given a “level playing field” on par with banks by allowing them (gold loan NBFCs) the freedom to lend against gold coins.

Shares of the two gold loan companies - Muthoot Finance and Manappuram Finance took a hit on the BSE on Tuesday as a consequence of the RBI's notification.

While Muthoot lost 2.01 per cent to close at Rs 144.15, Manappuram stock was marginally down 0.29 per cent and ended at Rs 16.95 per cent.

Apart from prohibiting NBFCs from lending against bullion or primary gold and gold coins, the notification also said that the NBFCs can advance money for purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold Exchange Traded Funds (ETF) and units of gold mutual funds.