Gold Finance Companies Extend Gains After RBI’s Final Gold Loan Guidelines

India’s top gold loan companies, Muthoot Finance and Manappuram Finance, are on a roll. Their shares have been climbing for two straight trading days, and it’s no coincidence. Investors are responding to the Reserve Bank of India’s (RBI) final rules for gold and silver-backed loans. Combined with broader economic support for NBFCs (non-bank financial companies), the market mood is bullish.

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RBI’s Surprise Moves Spark Optimism

So, what got the market so excited? On June 6, 2025, the RBI surprised everyone by cutting the repo rate by 50 basis points and slashing the Cash Reserve Ratio (CRR) by 100 basis points. This major liquidity push, nicknamed a “monetary bazooka,” was a big boost for NBFCs, especially those in the gold loan business.

But that’s not all. The RBI also released its long-awaited final rules on gold and silver loans. The headline change? For smaller gold loans (under ₹2.5 lakh), the Loan-to-Value (LTV) ratio is going up from 75% to 85%, and credit appraisals will no longer be required. These changes, which kick in from April 1, 2026, are expected to make borrowing easier for more people, and that’s great news for lenders like Muthoot and Manappuram.

Stock Market Reaction: More Gains

Let’s talk numbers:

• Muthoot Finance shares rose 2.5% in early trading.
• Manappuram Finance was up by about 2%.
   

This follows a strong rally last Friday when the draft rules first hit the news; Muthoot share price shot up 7%, and Manappuram share price gained 4%. Monday’s rise just reinforced investor confidence in these companies.

Gold Loan NBFCs Ride a Bigger Wave

These gains are part of a larger trend. NBFCs, in general, have been doing well since the RBI’s policy change. Take Bajaj Finance; it jumped 10% in two days thanks to its strong loan structure and funding strategy.

For gold loan NBFCs, a rate cut is usually good news—their short-term, high-yield lending model benefits from lower borrowing costs. Analysts believe we might be seeing a shift in momentum for the sector.

Company Snapshots: Strong and Strategic

Muthoot Finance stands tall as India’s largest gold-loan NBFC. It has over 5,000 branches and crossed ₹1 trillion in gold loan assets as of March 2025. The company reported a 33% increase in annual net profits and opened 800 new branches in FY 2024–25. They aim to achieve a 25% growth in assets in the future.

Manappuram Finance, the second-largest player, isn’t far behind. With more than 4,190 branches, it has diversified into mortgages and microfinance (through its Asirvad Microfinance arm). Analysts, such as those at ICICI Securities, have recently upgraded Manappuram, citing stable growth and an attractive valuation.

Meanwhile, Fitch Ratings believes that big names like Muthoot and Manappuram are well-prepared to meet the RBI’s tighter oversight. Smaller NBFCs, however, may struggle to keep up.

Investor Takeaways: Upside with Caution

Opportunities:

• More access to loans – Higher LTV and easier credit checks could drive more small-ticket loans.
• Stronger positioning – Muthoot’s growing branch network and digital partnerships (with platforms like Google Pay and PhonePe) put it in a great spot.
• Favourable policy – Lower interest rates and reduced CRR are a win for NBFCs relying on wholesale funds.
   

Challenges:

• More competition – Easier rules may attract new players, tightening profit margins.
• Operational pressure – While top NBFCs can handle compliance, smaller ones may hit roadblocks.
• Gold price risks – If gold prices swing wildly, it could impact how easily borrowers repay. Muthoot has a strict auction policy in place, though, which helps.
   

Financial Inclusion: The Bigger Picture

There’s a clear social aspect to all this as well. By increasing the LTV to 85% and waiving credit checks for smaller loans, the RBI is making it easier for individuals without formal credit histories, particularly in semi-urban and rural areas, to access much-needed funds. It’s a significant step for financial inclusion, and companies with a strong local presence will be key players.

Looking Ahead: What to Watch

• Macro trends – Liquidity is up, but inflation and global interest rate shifts could change the game.
• Rollout timing – The new rules will take effect from April 2026, but updates are likely to occur before then.
• Company health – Monitor disbursement volumes, margins under competition, and non-performing asset (NPA) trends.
   

Final Word: Strong Tailwinds, But Stay Sharp

Muthoot and Manappuram are riding a solid wave, thanks to the RBI’s policy boost, finalised gold loan reforms, and strong demand for gold-backed credit. Indeed, there are risks, particularly from competition and market fluctuations. However, with their scale, strategy, and solid fundamentals, these companies are well-positioned heading into FY 2026–27.

For investors, the mix is compelling: supportive policies, market leadership, and steady growth. Just make sure to keep an eye on regulation updates, profit margins, and how the macro trends evolve.