Muthoot Fin, IIFL Fin shares recover from day's low as RBI denies tightening of gold loans norms

Shares of companies related to gold loan financiers tumbled after Governor Sanjay Malhotra said the Reserve Bank of India (RBI) will soon issue guidelines on gold loans. The guidelines for co-lending will now be extended to all the regulated entities.

Following this, shares of Muthoot Finance, which has a gold portfolio of 50%, tanked 10%. Shares of Manappuram Finance and IIFL Finance also tanked 2.21% and 4.75%, respectively, on the National Stock Exchange.

Gold loans account for 98% of Muthoot Finance's total Assets Under Management (AUM), whereas for Manappuram and IIFL Finance, this percentage is 50% and 21%, respectively, of their overall AUM, media reports said.

“In order to harmonise guidelines across various types of regulated entities, to the extent possible, keeping in view their differential risk-bearing capabilities, we shall issue comprehensive regulations on prudential norms and conduct-related aspects for such loans,” said RBI Governor Sanjay Malhotra.

RBI reduced the policy repo rate by 25 basis points to 6% on Wednesday, shifting its stance to "accommodative" from "neutral".

Governor Malhotra said that uncertainty from tariffs and trade frictions could dampen growth by affecting investment, spending, and net exports, though falling crude oil prices and a weaker US dollar may provide some relief.

Meanwhile, during the follow-up press conference, the Governor said the guidelines will not be 'tightened'.

IIFL Finance, Manappuram Finance and Muthoot Finance shares recovered from day's low and was trading 1.98%, 1.77% and 6.54%, respectively.

Shares of Federal Bank, which has a gold loan portfolio of 15%, were also trading at ₹190.07 apiece on the NSE, up 0.24%.

CSB Bank, having a gold portfolio of 40%, also saw its stock declining 1.16% to ₹320 per share.

Gold prices continued to strengthen and reached new heights every month in 2025 till March.

The RBI in its policy report stated that the contribution of durable items (goods with a 365-day recall) to overall inflation edged up in January and February 2025 after remaining mostly steady during September-December 2024, reflecting the rising and elevated price inflation in gold and silver.

The pick-up in core inflation between August 2024 and February 2025 was largely contributed to by the personal care and effects sub-group reflecting the spike in gold and silver prices, the central bank said.

“The impact of the hike in trade tariffs by the US on the domestic inflation outlook is uncertain at the moment,” RBI said in its report.

Following the tariff announcements, commodity prices, however, have seen sharp swings – while energy and metal prices plunged, gold prices experienced considerable volatility.

The central bank further explained that amidst large uncertainties surrounding the global economic outlook, the considerable progress achieved on the disinflation front has provided greater leeway to monetary policy in effectively managing the growth-inflation balance.