Gold finance stocks were buzzing in trade on June 6 after RBI Governor Sanjay Malhotra stated that the loan-to-value for gold loans below Rs 2.5 lakh is set to be revised to 85 percent from 75 percent,  giving NBFCs greater lending flexibility. This led to sharp buying in gold financiers like Muthoot Finance, Manappuram Finance, and IIFL Finance, with their stocks rising between 2 to 7 percent.

This is a major positive shift from the earlier draft regulations, which had proposed to cap the LTV at 75 percent uniformly across banks and NBFCs. The updated guideline now allows NBFCs to offer more loans against the same gold collateral, which is expected to boost loan disbursements, attract more borrowers, and improve earnings growth for gold financiers.

Additionally, the Governor clarified that for small-ticket gold loans, credit appraisal will not be required, and end-use monitoring will only apply to those under the Priority Sector Lending (PSL) category. This simplification of operational norms will reduce paperwork, speed up processing, and lower compliance burden for lenders.

"There was nothing new in the draft norms on gold loans. We have consolidated all other norms. We have seen some regulated entities were not following the norms because there was no clarity hence we have consolidated it. We will today or by Monday morning release the final guidelines," Malhotra added.

On the broader policy front, the RBI also cut the repo rate by 50 basis points to 5.50 percent, marking its third consecutive cut in 2025. Alongside, a 100 basis point reduction in the Cash Reserve Ratio (CRR) has also been announced. These moves are expected to inject liquidity into the banking system, encouraging banks to lower deposit rates and expand credit.

However, thanks to mark-to-market (MTM) gains in equities, the overall net assets under management (AUM) of the mutual fund industry rose to Rs 72.20 lakh crore for the first time against Rs 69.99 lakh crore in April. Overall, the mutual fund industry saw net inflows of Rs 29,108.33 crore in May.

After May, net inflows into open-ended equity funds have stayed in the positive zone for the 51st month in a row, starting from March 2021.

"The Indian mutual fund industry has crossed Rs 70 lakh crore in AUM, reaching new highs, driven by resilient retail participation and consistent SIP inflows. The growth of SIP is particularly encouraging, indicating a shift towards disciplined, long-term investment. Equity inflows moderated to Rs 19,013 crore this month, reflecting cautious investor sentiment amidst market volatility. Such phases often witness a natural reallocation towards hybrid and arbitrage schemes, offering a more balanced approach during uncertain times," said N Chalasani, Chief Executive, AMFI.

The slump in inflows comes despite the market recovery. In May, the BSE benchmark Sensex rose 1.51 percent and NSE Nifty50 jumped 1.71 percent.

Meanwhile, the monthly inflow into mutual funds through the Systematic Investment Plan (SIP) route rose by 0.21 percent to a fresh high of Rs 26,688 crore in May, latest data from AMFI showed on June 10, despite a drop in inflows into the equity category.

"The broader slowdown in equity inflows can be attributed to a mix of factors: a less buoyant equity market in May compared to April, concerns around global economic headwinds, and a possible consolidation phase or profit booking in the domestic equities following sharp rallies in the previous months and stretched valuations. Also, heightened global volatility—stemming from geopolitical tensions with India launching Operation Sindoor against Pakistan and concerns around global inflation, contributed to a risk-off sentiment among some investors," said Himanshu Srivastava – Associate Director- Manager Research, Morningstar Investment Research India.