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The Hindu
18 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.
Reuters
21-03-2025
- Business
- Reuters
Indian gold loan provider Manappuram hits record high as Bain Capital plans stake buy
March 21 (Reuters) - Shares of India's Manappuram Finance ( opens new tab jumped 6% on Friday after analysts said that Bain Capital's plans to buy an 18% stake and jointly control the gold loan provider will help ease its management succession plans. U.S. private equity firm Bain Capital will subscribe to Manappuram's shares and warrants at 236 rupees apiece, at a 9% premium over the stock's closing price on Thursday of 217.5 rupees. here. After the investment, which is valued at $508 million, Bain Capital will jointly control Manappuram with other large shareholders, termed as 'promoters' under Indian regulations. Manappuram's shares rose as much as 6.3% to 231.08 rupees - their highest level on record - as of 12:05 p.m. IST. The company's founder and CEO V.P. Nandakumar, who has been at the helm for almost four decades, will become the company's non-executive chairman post the investment, it said on Thursday, with investors now eyeing nominations for the top role. Bain Capital will also have the capacity to influence strategic decisions at Manappuram, including the right to nominate for the appointment of key roles, such as the CEO, which analysts at Jefferies and CLSA see as a key positive from the deal. "We see the possibility of healthy re-rating in Manappuram stock as new management takes over," CLSA analysts said in a note. Jefferies and CLSA raised their price targets on the stock after the announcement by 14.6% and 20%, respectively. They have "buy" and "outperform" ratings on the stock. The deal, which comes at a time when record prices have made gold mortgaging appealing, is expected to close in the next financial year and will aid growth in Manappuram's gold loan business. Gold loans contribute 75% of the company's overall revenue. Jefferies also said that a part of the capital raised from the stake sale may be utilized to absorb losses in Manappuram's microfinance business, which was hit by uncertainty in market conditions and regulatory scrutiny. Its unit, Asirvad Micro Finance would withdraw the IPO draft papers, Manappuram said on Thursday.
