Shares of two gold financing firms lost 4.52% to 4.83% at 12:06 IST on BSE, with these stock extending Tuesday's fall triggered by the Reserve Bank of India announcing tightening of rules for finance companies which lend against gold.
Muthoot Finance (down 4.83%) and Manappuram Finance (down 4.52%) edged lower.
Meanwhile, the BSE Sensex was up 62.84 points, or 0.32%, to 19,866.87
Muthoot Finance outperformed the market over the past one month till 17 September 2013, rising 8.94% compared with the Sensex's 6.48% rise. The scrip, however, underperformed the market in past one quarter, falling 16.82% as against Sensex's 2.47% rise.
Manappuram Finance outperformed the market over the past one month till 17 September 2013, rising 14.39% compared with the Sensex's 6.48% rise. The scrip also outperformed the market in past one quarter, rising 4.38% as against Sensex's 2.47% rise.
Shares of gold financing firms Muthoot Finance and Manappuram Finance extended Tuesday's fall triggered by the Reserve Bank of India announcing tightening of rules for finance companies which lend against gold. Muthoot Finance had lost 8.28% to Rs 103.60 on Tuesday, 17 September 2013. Manappuram Finance had declined 4.62% to Rs 15.50 on Tuesday, 17 September 2013.
The Reserve Bank of India (RBI) tightened rules for finance companies which lend against gold. The RBI on Monday, 16 September 2013, said lenders need to value the pledged gold at the average closing price of 22-carat gold for the preceding 30 days as quoted by the Bombay Bullion Association to arrive at the loan-to-value ratio. The ratio would remain at 60% for loans against jewellery. Currently, there is no standard method for arriving at the value of gold accepted as collateral and valuation is arbitrary and opaque, the central bank said in a notification issued late on Monday, 16 September 2013.
The central bank also streamlined the process by which lenders auction gold when a borrower defaults, saying lenders need to declare a reserve price for the pledged ornaments. Lenders would also need RBI approval to open branches exceeding 1,000. No new ones would be allowed without adequate storage facility for gold. Unbridled growth may not be in the overall interests of the concerned NBFC or the sector and there is a need for consolidation of the existing network, the central bank said.
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