Mumbai: RBI has shifted to tighten the gold-supported lending oversight. In the draft guidelines issued on 3 April, the central bank proposed a uniform hat at a loan-to-price (LTV) Ratio for gold loan, limited it to 75% of the collateral value. For NBFCs, this roof will apply equally, whether for debt consumption or other purposes. during KovidRBI rested the criteria and allowed 90% loan-to-price ratio for one year.
The RBI called for more and more internal accountability among the lenders. Banks and NBFCs will need to determine their LTV boundaries based on internal risk assessment. A standardized structure is to be introduced to assume the gold collateral, which requires lenders to disclose the reference price and assess purity, adopt a similar method and calculate the gross and pure weight. This assessment process should be continuously implemented in branches and disclosed on the lender’s website.
“Keeping in mind your risk taking abilities, and keeping in mind some concerns, it has also been decided to issue comprehensive rules on prudent rules and related aspects for such loans, keeping in mind some concerns, keeping in mind some concerns, keeping in mind some concerns, with the harmony of such rules,” RBI Governor Sanjay Malhotra Said. Proposals part of RBI’s developmental and regulatory agenda will be finalized after public consultation.
RBI also proposed strict rules to classify gold-supported loans. Lending decisions should prioritize the credit and cash flow of the borrower instead of the gold value only instead of the gold value. Loans intended for productive purposes should be classified by their end-use, not by the nature of the collateral.
