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Gold loan firms rally on hopes of higher LTV ratio

Manappuram Finance and Muthoot Finance have rallied more than 8% each on BSE on back of heavy volumes.

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SI Reporter Mumbai
Last Updated : Jan 29 2013 | 2:34 PM IST

Shares of gold finance companies mainly Manappuram Finance and Muthoot Finance have rallied more than 8% each on BSE on hopes of upward revision cap on gold loan-to-value (LTV) ratio.

According to draft report prepared by a working group set up by the Reserve Bank of India (RBI), under the chairmanship of K U B Rao, an adviser to RBI’s department of economic and policy research, has suggested a review of the cap on the LTV of gold-loan non-banking finance companies (NBFCs) to 75%.

Currently, the ratio for gold loans by NBFCs is capped at 60%. This means for gold worth Rs 100 offered as collateral, lenders can give loans up to Rs.60

Among the individual stocks, Manappuram Finance has rallied 18% to Rs 39.85 on back of over eight-fold jump in trading volumes. A combined 8.9 million shares have already changed hands on the counter in morning deals against an average around 1.4 million shares that were traded daily in past two weeks.

Muthoot Finance has surged almost 10% at Rs 229 and has seen a combined 1.14 million shares changing hands on the counter so far on the BSE and NSE.

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First Published: Jan 03 2013 | 10:15 AM IST

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