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
Japanese electronics maker Panasonic Corp. is in talks to buy Austrian headlight manufacturer ZKW Group GmbH, Nikkei business daily reported Monday, citing a person familiar with the matter. As per the report, both companies could reach a basic agreement as early as this month for a deal that could be worth up to $1 billion. Netflix offers a bunch of popular movies, Netflix originals, new TV shows, and documentaries in the month of December 2016, including the second season of the hit sitcom 'Fuller House' and 2016 blockbuster 'Captain America: Civil War', as all are getting ready for the holidays. SpaceX, the space transport company of Tech entrepreneur Elon Musk, is likely to launch its first Falcon 9 rocket since September's launchpad explosion on December 16. SpaceX's satellite launch customer Iridium Communications Inc. announced Thursday that its next-generation global satellite constellation, Iridium NEXT, will be launched on SpaceX's Falcon 9 rocket.
comments powered by Disqus
Follow RTT