The Reserve Bank of India (RBI) has rolled out revised gold loan regulations aimed at making borrowing more accessible, particularly for smaller loans. The updated rules allow borrowers to avail higher loan amounts against the value of their gold, easing earlier restrictions.
Under the new framework, borrowers seeking loans up to Rs. 2.5 lakh can now receive financing up to 85 percent of their gold’s value, inclusive of interest — an increase from the previous 75 percent cap. For loans ranging between Rs. 2.5 lakh and Rs. 5 lakh, the maximum loan-to-value ratio stands at 80 percent. Loans exceeding Rs. 5 lakh retain the earlier limit of 75 percent.
Additionally, small loans up to Rs. 2.5 lakh are exempt from detailed credit checks, and lenders are no longer mandated to track the utilization of borrowed funds, streamlining the lending process for lower-ticket borrowers.
Morgan Stanley’s Top Picks in Gold Financing Sector
Following the announcement, global investment firm Morgan Stanley identified key beneficiaries of the new gold loan norms. Muthoot Finance and Manappuram Finance emerged as primary picks, receiving an Equalweight rating from the firm. Shriram Finance and Bajaj Finance also stand to gain, earning an Overweight rating.
Morgan Stanley highlighted Muthoot Finance’s strong guidance for fiscal year 2026, suggesting potential for further stock appreciation. However, Manappuram Finance faces some headwinds due to Bain Capital’s open offer at Rs. 236 per share.
Market Performance Highlights
Muthoot Finance: With a market capitalization of Rs. 1,01,442 crore, the stock opened at Rs. 2,479.70, marking a 1.34 percent increase from the previous close. It touched a high of Rs. 2,547.65 during the day, up 4.12 percent. The stock’s annual return stands at 44 percent, while the five-year return impressively totals 158 percent.
Manappuram Finance: Holding a market cap of Rs. 21,648 crore, the stock opened at Rs. 249.90, up 0.92 percent from the prior close. It reached a high of Rs. 255.95, gaining 3.37 percent intraday. The company’s yearly return is 44 percent, with a five-year return of 75 percent.
