Shares of gold finance companies-Muthoot Finance and Manappuram Finance-today fell by up to 8.3 per cent on gold loan guidelines by the Reserve Bank of India.
Muthoot Finance stock tumbled 8.28 per cent to Rs 103.60, while Manappuram Finance plunged 4.62 per cent to Rs 15.50 on the BSE.
The recommendations of the working group, in so far as they relate to NBFCs lending against the collateral of gold jewellery, have been broadly accepted by the bank, RBI said in a notification yesterday.
The notification said that NBFCs shall not issue misleading advertisements like claiming the availability of loans in a matter of 2-3 minutes.
The central bank also said, it is henceforth mandatory for NBFC to obtain prior approval of the RBI to open branches exceeding 1,000. However, NBFCs which already have more than 1,000 branches may approach the Bank for prior approval for any further branch expansion.
Besides, no new branches will be allowed to be opened without the facilities for storage of gold jewellery and minimum security facilities for the pledged gold jewellery.
High value loans of one lakh and above must only be disbursed by cheque, the RBI said.