RBI imposes prudential norms on NBFCs giving gold loans

The Reserve Bank of India has said all non-banking finance companies that lend against gold collateral should maintain a loan-to-value ratio not exceeding 60 percent for loans granted against gold jewellery.

Such NBFCs should not grant any advance against bullion/ primary gold and gold coins, the RBI said.

[caption id=“attachment_251878” align=“alignleft” width=“380” caption=“The prudential norms have been imposed considering the rapid growth of such firms and nature of their business model.AP”]  [/caption]

The companies should also disclose in their balance sheet the percentage of such loans to their total assets.

The prudential norms have been imposed considering the rapid growth of such firms and nature of their business model which has increased dependence on public finance, the RBI said in a notification on its website.

More from Business

Hyundai India’s Rs 27,870 crore IPO oversubscribed by 2.28X, largely driven by institutional investors How Indian fintech startups are driving Malaysia’s UPI-like digital payments revolution

All NBFCs with such loans comprising 50 percent or more of their financial assets shall maintain a minimum tier-1 capital of 12 percent by 1 April, 2014, the RBI said.

Manappuram Finance, Muthoot Finance and SKS Microfinance are some of the NBFCs that offer loans against gold in India.

Reuters