Manappuram Finance today said it will reduce the loan amount to 60% of the gold value, at par with the Reserve Bank directions.
Currently, the average Loan-to-Value (LTV) offered by Manappuram Finance on its gold loan is at 66%.
RBI earlier this week had directed all non-banking finance companies (NBFCs) not to sanction loan beyond 60% of the value of gold jewellery.
"We are of the opinion that the new RBI measures will ultimately strengthen the well-capitalised established players in the business with sound operating and risk management practices," the Executive Chairman of Manappuram Finance, VP Nandakumar, said in a statement.
The central bank had also directed that NBFCs whose financial assets consist of loans against gold jewellery to the tune of 50% or more, will have to maintain 12% tier-I capital by April 1, 2014.
"The capital adequacy ratio of Manappuram Finance is already at 18.37% (as on Dec 31, 2011) as against the 12% to be attained by April 2014 stipulated by RBI," Nandakumar said.
