Latest news with #ManappuramFinanceLtd
The Hindu
16 hours ago
- Business
- The Hindu
RBI's gold loan direction brings clarity, standardisation, greater consumer protection, says Manappuram Finance MD
'The 'Lending Against Gold and Silver Collateral Directions, 2025' notified by the Reserve Bank of India (RBI) on Friday has brought clarity, standardisation, and greater consumer protection to the gold and silver loan segment, said V. P. Nandakumar, Managing Director and CEO of Manappuram Finance Ltd. 'The guidelines on valuation, assaying, and loan-to-value (LTV) ratios are timely and progressive. In particular, the provision allowing a maximum LTV ratio of 85% for loans amount up to ₹2.5 lakh. It will significantly benefit small-ticket borrowers,' he said. Stating that the new directions have consolidated and replaced earlier circulars, he said these have create a uniform code applicable to all regulated entities, including NBFCs, banks, and cooperative institutions. 'These guidelines aim to promote transparency, ethical practices, and prudential discipline while enhancing financial access for individuals and micro-enterprises,' he said. Highlighting that the continued eligibility of gold jewellery, ornaments, and coins as collateral reflected the RBI's recognition of the critical role of gold loans in meeting short-term liquidity needs, he said the standardised assaying process—mandating borrower presence and use of reference prices from the Indian Bullion and Jewellers Association (IBJA) or SEBI-regulated exchanges—would foster uniformity across the industry. 'Manappuram Finance has long adhered to rigorous valuation norms, and we view this framework as an endorsement of our transparent and ethical lending model,' he emphasised. On the revised LTV guidelines, Mr Nandakumar said, 'The RBI has prudently capped LTVs at 85% for loans up to ₹2.5 lakh, 80% for loans between ₹2.5 and ₹5 lakh, and 75% for loans above ₹5 lakh. These thresholds strike a balance between borrower access and systemic stability. We are fully aligned with these stipulations and will implement them rigorously.' Regarding bullet repayment loans, he acknowledged the RBI's cap of 12 months for such loans, with renewals allowed only upon creditworthiness and interest repayment. On the customer conduct and protection norms, he said, 'The emphasis on clear documentation, borrower communication, and transparent auction procedures aligns with our customer-first approach. We already involve borrowers in the assaying process and provide detailed disclosures in loan agreements, and these practices will continue.' On collateral management, he said, 'We place the utmost importance on secure storage, stringent internal audits, and surprise verifications. The RBI's directives reinforce our long-standing commitment to safeguarding customer assets.' Welcoming the RBI's provisions for fair compensation in the event of loss, damage, or delayed return of pledged assets, and its emphasis on disbursing loans directly into verified bank accounts in compliance with KYC and Income Tax Act provisions, he said' These directions reflect the regulator's focus on integrity, accountability, and customer rights. 'We are fully prepared to implement the new guidelines well ahead of the April 2026 deadline. We believe this framework will further bolster public trust in gold loans as a reliable and responsible source of credit,' he stated.
Business Upturn
2 days ago
- Business
- Business Upturn
Explained: What does the RBI decision of revising Gold Loan LTV to 85% from 75% means
In a key announcement during the RBI monetary policy press conference, Governor Sanjay Malhotra stated that the Loan-to-Value (LTV) ratio for gold loans up to ₹2.5 lakh per borrower will be revised to 85% from the existing 75%, including the interest component. Simply put, if you pledge gold worth ₹1 lakh, you can now borrow up to ₹85,000 instead of ₹75,000 earlier. This move is aimed at enhancing liquidity access for small borrowers, particularly in rural and semi-urban areas where gold loans are a common form of short-term credit. What is LTV and why does it matter? The Loan-to-Value ratio refers to the proportion of a loan that can be disbursed against the value of the collateral—in this case, gold. A higher LTV allows borrowers to access a larger amount of funds without needing to pledge more gold. This makes borrowing more accessible and efficient, especially in times of emergency or financial stress. With the LTV cap now raised to 85%, borrowers will have more flexibility and headroom to meet their credit needs without turning to informal lending sources. Why did RBI change the rule? RBI Governor Sanjay Malhotra clarified that the LTV revision is part of a broader push to standardize and streamline gold loan regulations, particularly for small-ticket loans. Key highlights from his remarks include: Final guidelines on gold loan regulations will be issued today or latest by Monday. The existing draft was not new , but a reiteration of past directions , aiming to resolve non-compliance by some lenders. Credit appraisal requirements will be removed for gold loans up to ₹2.5 lakh. End-use monitoring will only be required under Priority Sector Lending (PSL) norms. Market response: Gold loan financiers surge The announcement triggered sharp gains in shares of key gold loan NBFCs: Muthoot Finance Ltd. surged up to 8% Manappuram Finance Ltd. rose nearly 5% IIFL Finance Ltd. gained around 5% What does it mean for lenders? For gold loan financiers, the revised LTV expands their lending potential without needing new customers, as they can now lend more against the same value of gold. This is expected to grow their loan books, improve margins, and enhance customer retention. The removal of credit appraisal for small loans also reduces operational overhead and streamlines disbursal processes, leading to faster turnaround times and better service efficiency. In short, the regulatory easing is a win-win for both lenders and borrowers—borrowers get more credit access, and lenders unlock greater business potential within existing regulatory boundaries. In summary: The RBI's decision to raise the LTV ratio for small gold loans brings easier, quicker, and higher access to credit for borrowers, while opening up significant growth opportunities for gold loan lenders by enabling larger disbursements, reduced processing time, and expanded loan books. Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information. Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
