Muthoot Finance shares surge 6% as FinMin bats for exemption of sub-Rs 2 lakh gold loans from RBI rules
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Shares of Muthoot Finance surged 6.15% to hit the day's high of Rs 2,193 on the BSE on Thursday after the Finance Ministry suggested that borrowers availing gold loans below Rs 2 lakh should be exempted from the Reserve Bank of India's (RBI) proposed draft guidelines.'@DFS_India has suggested that small ticket borrowers below Rs 2 lakh may be excluded from the requirements of these proposed directions to ensure timely and speedy disbursement of loans for such small ticket borrowers,' the finance ministry said in its tweet on the social media platform X.The Finance Ministry said that the draft guidelines issued by the Reserve Bank of India (RBI) on lending against gold collateral may be deferred and softened for small borrowers.In an official post on the social media platform X, the ministry said it has reviewed the RBI's proposed draft directions under the guidance of Union Finance Minister Nirmala Sitharaman and has given suggestions to the central bank.The recommendation was made to safeguard the interests of small-ticket borrowers and ease operational constraints for lenders, particularly non-banking financial companies (NBFCs) such as Muthoot Finance.'Draft Directions on Lending Against Gold Collateral issued by the @RBI have been examined by @DFS_India under guidance of Union Minister for Finance and Corporate Affairs Smt. @nsitharaman,' the post read.The Department of Financial Services (DFS), operating under the Finance Ministry, has stated that such guidelines may require more time for implementation at the field level and therefore could be made effective from January 1, 2026.The Finance Ministry's recommendation provides significant relief to gold financing companies, particularly NBFCs like Muthoot Finance, whose core business revolves around small-ticket gold loans.The draft norms, if implemented without relaxation, could have increased operational burdens and slowed disbursements, especially in rural and semi-urban markets where small loans dominate.By suggesting a delayed implementation timeline and calling for exemptions for loans under Rs 2 lakh, the ministry has signalled regulatory flexibility, which helps preserve business volumes, maintain customer access, and reduce compliance risks for lenders heavily dependent on gold-backed lending : Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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