logo
Share SHARE
FONT-SIZE Plus   Neg

RBI Tightens Norms For NBFCs For Gold Lending

The Reserve Bank of India (RBI) has tightened norms for non-banking finance companies (NBFCs) which lend against gold, a fast-growing business in the country, in line with the recommendations of an internal panel.

The RBI said lenders need to value the pledged gold at the average closing price of 22-carat gold for the preceding 30 days as quoted by the Bombay Bullion Association Ltd, to arrive at the loan-to-value ratio.

The ratio would remain at 60 percent for loans against jewellery.

"Currently, there is no standard method for arriving at the value of gold accepted as collateral and valuation is arbitrary and opaque," the apex bank said in a notification issued late on Monday.

The apex bank also streamlined the process by which lenders auction gold when a borrower defaults, saying lenders need to declare a reserve price for the pledged ornaments.

Lenders would also need RBI approval to open branches more than 1,000. Besides, no new branches will be allowed without adequate storage facility for gold.

"Unbridled growth may not be in the overall interests of the concerned NBFC or the sector and there is a need for consolidation of the existing network," the RBI said.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

More Breaking News

0 Articles
Editors Pick
Shares of French lender Societe Generale SA were gaining around 4 percent in the early morning trading in Paris after the company reported Wednesday higher profit in its first quarter, even as net banking income was weak. Looking ahead, Chief Executive Officer Frédéric Oudéa said, "With a sound balance sheet and robust solvency ratios, the Group is confident about its outlook for 2016,.. After serving up a sumptuous quarterly performance, McDonald's is out experimenting to further enhance its appeal to customers. The fast food chain is testing garlic fries at four restaurants in South Bay locations as part of an experiment with regional flavors and food on its menu. Media entertainment company CBS Corp. (CBS, CBS-A), Tuesday reported an increase in profit for the first quarter, driven largely by double-digit increase in revenues reflecting strong performance of television network segment. The New York-based company's first-quarter profit rose to $473 million...
comments powered by Disqus
Follow RTT