Muthoot Finance rallies 10% in 2 days, mcap crosses ₹1 trillion; here's why

RBI's revised guidelines are structurally positive for small-ticket credit lenders like Muthoot and Manappuram Finance, believe market analysts.

Share price movement of gold finance companies today

 

Shares of gold finance companies like Muthoot Finance (₹2,523.75) and Manappuram Finance (₹253.90) were trading higher for the second straight day, hitting new highs on the BSE in Monday’s intra-day trade. These stocks were up in the range of 2 per cent to 3 per cent in intra-day deals.

 

In the past two trading days, the stock prices of gold finance companies have rallied up to 10 per cent after the Reserve Bank of India (RBI) on Friday issued its final rules on loans against gold collateral, detailing easier norms for small ticket loans.

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Market capitalisation of Muthoot Finance crosses ₹1 trillion

 

The market capitalisation of Muthoot Finance, the India’s largest gold financing company in terms of loan portfolio, crossed ₹1 trillion-mark for the first-time after as the share price rallied 10 per cent in the past two trading days. At 09:29 AM; with ₹1.01 trillion (₹100,715 crore) market cap Muthoot Finance was trading 2.5 per cent higher on the BSE, the exchange data shows. In comparison, the BSE Sensex was up 0.5 per cent at 82,587.

 

RBI revised guidelines for gold and silver-back loans

 

The RBI’s revised guidelines for gold and silver-backed loans, effective April 1, 2026 aimed at improving credit access for small borrowers and harmonising regulations across banks and NBFCs. The Loan-To-Value (LTV) ratio for loans up to ₹2.5 lakh has been raised to 85 per cent (from 75 per cent), while loans between ₹2.5–5 lakh capped at 80 per cent. Bullet loans must calculate LTV on total maturity payout. 

 

Ownership proof norms have been eased via self declarations, and detailed credit assessment is exempted for sub-₹2.5 lakh loans used for productive purposes. Valuation will exclude gems and use 30-day average prices. Lending against bullion, ETFs, or re-pledging is barred.

 

These guidelines will apply uniformly to all the regulated entities doing gold lending, including banks, small finance banks (SFBs), and NBFCs. These gold lending guidelines have to be complied with as expeditiously as possible as but no later than April 2026. Loans sanctioned before the date of adoption of these directions shall continue to be governed by the extant guidelines.  ALSO READ | Afcons Infrastructure shares jump 6% after ₹700 crore LoA from RIL

 

Brokerage views on final gold lending guidelines

 

While there will be a minor impact on the disbursement LTVs of gold loan NBFCs, they can be significantly mitigated by incentivizing customers to repay interest at 1M/3M/6M intervals and by introducing select products with loan tenors of 6 months. However, analysts at Motilal Oswal Financial Services believe that the implementation of the final guidelines will intensify competition between banks and NBFCs, as the regulatory parity on LTV norms will erode the regulatory arbitrage that NBFCs had in offering higher disbursement-LTV gold loans.

 

Now that the RBI has released the final guidelines on gold loans, the overhang on the gold loan NBFCs will now go away. This is positive for gold loan NBFCs, particularly Muthoot Finance, which had borne the maximum brunt of the draft gold lending guidelines. “Our ratings and estimates are unchanged since we always believed that the gold lending guidelines would not have any significant impact on gold loan growth over the medium to long term,” the brokerage firm said.

 

RBI’s revised guidelines are structurally positive for small-ticket credit lenders; the higher LTV limits and relaxed norms are expected to drive growth in gold loan demand, benefiting players like Muthoot Finance and Manappuram Finance, ICICI Securities said in a note.