Gold stocks melt on tight RBI norms

The Reserve Bank of Indias move to tighten rules for lending against gold by non-banking finance companies NBFCs sent investors in such companies scurrying for cover on Thursday. Muthoot Finance,the leader in the business,tanked by 20 per cent intra-day to a lifetime low of Rs 130.30 before recovering partially to close 9.89 per cent down at Rs 146.65 on the BSE.

Manappuram Finance plunged by 18.54 per cent to a low of Rs 36.90 on heavy selling pressure. The RBI has asked NBFCs to maintain a loan-to-value ratio not exceeding 60 per cent for loans granted against the collateral of gold jewellery. Tightening norms for NBFCs that are engaged in gold loan business,the RBI said that they have recorded significant growth in recent years both in terms of balance sheet size and physical presence.