RBI Policy With Anil Singhvi: As RBI hikes gold loan-to-value ratio to 90 pct, know impact on 2 stocks

Top Stocks to Buy: In a big move in its August Monetary Policy announcement today, the Reserve Bank of India (RBI) increased the gold loan-to-value ratio from the earlier 75 per cent to 90 per cent. The relaxation will be available till 31 March 2020. However, it created much confusion in the markets. Mapping the road ahead for market participants after the RBI announcement, was Zee Business Managing Editor Anil Singhvi. The Market Guru spoke to market analyst Sanjiv Bhasin and the IIFL Director had this to say. 

On the impact of this move on the gold loan companies, Bhasin said that it is a win-win situation. The market expert said that there was no collateral risk in gold financing as there is only one collateral asset instead of ten types of assets.

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जानिए बैंकों के लिए 31 मार्च 2021 तक गोल्ड लोन LTV बढ़ाकर 90% करने पर क्या है संजीव भसीन की राय?#RBICreditPolicy #RBI #RBIPolicy #CreditPolicy @AnilSinghvi_ @sanjiv_bhasin @IIFLMarkets pic.twitter.com/4PeO0Mk3rf

— Zee Business (@ZeeBusiness) August 6, 2020

For companies like Muthoot Finance, it is a runaway business now, he added. There is no risk for lender as the gold is now trading around USD 2000, he further said.  

While welcoming the move, Bhasin said that the Federal Bank will be an “inordinate” beneficiary of this. He said that it is a largest lender in this segment, calling the Federal Bank stock a “Blind Buy”. 

He further said that it is a myth created in some quarters that bank’s NRI Deposits would come down. The CASA ratio has been going up for the bank and its NPAs are also at a six year low, he added. 

Bhasin has been bullish on Federal Bank and has been recommending the stock for channel viewers.  

Among other important takeaways from the bi-monthly policy announcement, the Monetary Policy Committee (MPC) headed by Governor Shaktikanta Das also retained key policy rates.

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This was the 24th meeting of the MPC. The MPC has cumulatively cut the repo rate by 115 basis points over two meetings, resulting in total policy rate reduction of 250 basis points since February 2019, with an aim to boost economic growth.