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Code: 531213
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Stock Alert: Gold loan firms dip as RBI further tightens norms

SI Reporter / Mumbai 17 Apr 12 | 11:51 AM

Shares of non-banking finance companies (NBFC) engaged in gold loans have plunged more than 5% after the Reserve Bank of India (RBI) tightens norms of NBFC’s that are predominantly engaged in lending against collateral of gold jewellery

Manappuram Finance has plunged 8% to Rs 31.45, while Muthoot Finance by 5% at Rs 124 on the Bombay Stock Exchange.

The Central Bank in its Monetary Policy Statement 2012-13 have proposed that: banks should reduce their regulatory exposure ceiling in a single NBFC, having gold loans to the extent of 50% or more of its total financial assets, from the existing 10% to 7.5% of bank’s capital funds.

“The banks should have an internal sub-limit on their aggregate exposure to all such NBFCs, having gold loans to the extent of 50% or more of their total financial assets, taken together," it added.

Meanwhile, to undertake a detailed study of the complaints against some NBFCs that they are not scrupulously following proper documentation process and know your customer (KYC) norms, among others, in order to quickly dispose off the cases relating to gold loans, the RBI has constituted a Working Group led by Shri K. U. B. Rao.

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