In its current RBI credit policy update; Reserve Bank of India has asked banks to reduce their exposure to non-banking financial companies (NBFCs) and they are targetting those companies which have given loans mostly against gold. No doubt RBI is talking tough and means business as it sees another bubble erupting in the NBFC segment.
Which are the NBFC s likely to be affected?
NBFCs, which have gold loans as 50 percent or more of their total financial assets are likely to fall under this category. This announcement is of significance for companies like Muthoot, Manapuram finance companies etc as it means that their shares will fall in coming days.
In its directive it has asked Banks to reduce their regulatory exposure in a single such company to 7.5 percent of their capital fund from the current 10 percent
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