Shares of Muthoot Finance surged over 7% on Friday, 30 May, after the government urged the Reserve Bank of India (RBI) to delay the rollout of new gold loan guidelines until January 2026, aiming to protect the interests of small borrowers.

The Ministry of Finance stated that the Department of Financial Services (DFS) has reviewed the RBI’s Draft Directions on Lending Against Gold Collateral and suggested changes to safeguard the interests of small gold loan borrowers.

The Ministry noted that DFS stated that such recommendations will take time to execute at the field level and hence may be appropriate for implementation beginning 1 January 2026.

DFS proposes exempting small ticket borrowers under Rs 2 lakh from proposed loan disbursement requirements, according to a post on X. “It is expected that concerns raised by various stakeholders, as well as the feedback received from the public, will be duly considered by the RBI before finalising the directions on the same.”

What are RBI’s draft rules for gold loans? 

Earlier last month, the central bank presented a proposed regulatory framework for lending against gold collateral. The action came as the RBI increased its efforts to improve credit standards and bolster consumer protection.

The draft framework seeks to provide a “harmonised set of rules” for all lenders engaging in gold-backed financing, including banks, non-banking finance companies (NBFCs), including housing finance companies (HFCs), co-operative banks, and regional rural banks (RRBs).

According to RBI Governor Sanjay Malhotra, the proposed gold loan restrictions will rationalise rather than constrain lending.  To understand the important recommendations in the draft guidelines,

However, experts believe that new limitations may slow loan growth for NBFCs that focus on gold lending.  Muthoot is one of the leading players in the gold loan industry, focused on loans against gold jewellery, and its shares fell sharply after the RBI made the statement.

Muthoot Finance is a non-banking financial organisation (NBFC) that provides gold loans.  The company specialises in secured loans against gold jewellery and provides financial solutions to both people and corporations.  In addition to gold loans, Muthoot Finance provides money transfer services, foreign exchange, insurance, and microfinance, broadening its reach in the financial inclusion sector.

At 12:55 pm, the shares of Muthoot Finance were trading 6.90% higher at Rs 2,207.80 on NSE.

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