This comes after the Finance Ministry posted on social media platform X that the Department of Financial Services (DFS) is examining the draft directions on lending against collateral issued by the Reserve Bank of India (RBI).
The DFS has made recommendations
that aim to protect the interests of small-ticket borrowers.
The DFS has suggested that the requirements of small gold loan borrowers should not be adversely affected.
The same will be issued for implementation only from January 1, 2026.
Small ticket borrowers below ₹2 lakh should be excluded from the proposed directions, the DFS has suggested. The average ticket size for Muthoot Finance at the end of the third quarter stood at over ₹1.13 lakh.
The RBI is reviewing the feedback it has received on the draft guidelines.
In April, the central bank issued the draft guidelines on gold loans. A joint supervisory review revealed several irregularities such as weak oversight of loan-to-value (LTV) ratio, misuse of third-party agents, improper risk assessments, and non-transparent auction procedures.
In its annual report, the RBI told lenders to review their gold loan processes and promptly fix the identified gaps.
Shares of Muthoot Finance Ltd gained 5.7% to hit an intraday high of ₹2,183.1 apiece. The stock has gained 12.33% in the last six months.
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