Gold loan providers surge on RBI report proposals

Thu Jan 3, 2013 12:36pm IST

Gold jewellery is on display at a jewellery showroom in Kolkata March 6, 2008. REUTERS/Parth Sanyal/Files

Gold jewellery is on display at a jewellery showroom in Kolkata March 6, 2008.

Credit: Reuters/Parth Sanyal/Files

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Reuters Market Eye - Shares in gold loan providers such as Manappuram Finance soar after an RBI report proposed increasing the loan-to-value, or LTV, ratio to 75 percent from 60 percent currently.

The ratio is an important tool that can vary the quantity of gold loans which a company can provide to customers.

"The proposals to increase LTV and to use cheques for high-value transactions are positive, but a cap on lending rates and restrictions on NCD (non-convertible debentures) will affect gold-loan NBFCs' profitability," Kotak Securities said in a note.

Muthoot Finance shares up 9 percent, while Manappuram Finance (MNFL.NS) rises 16 percent.

Shares in Titan Industries, which makes gold jewellery, are down 1 percent on concerns over rising costs after the government says it will make importing gold costlier.

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