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Gold-based lenders fall; RBI measures seen negative

An employee shows a gold bangle to a customer inside a jewellery showroom in Mumbai August 30, 2013. REUTERS/Danish Siddiqui/Files

Reuters Market Eye - Shares of gold-based non-banking lenders slump after the Reserve Bank of India (RBI) said on Monday that it broadly accepted its working group's recommendations on non-banking financial companies lending against the collateral of gold jewellery.

Muthoot Finance Ltd (NSI:MUTHOOTFIN) closed 8 percent lower, while Manappuram Finance Ltd (NSI:MANAPPURAM) lost 5 percent.

Traders say recommendations including prior approval of the RBI for opening branches in excess of 1,000 and standardization of value of gold in arriving at loan-to-value ratio are seen hurting the expansion of the companies over the long run.

(Reporting by Abhishek Vishnoi)