Breaking News
FONT-SIZE Plus   Neg
Share SHARE

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

Editors Pick
Reserve Bank of Australia Governor Glenn Stevens kept the foreign exchange intervention plan open to build up confidence and bring the stubbornly high currency to lower levels."The exchange rate, another channel through which monetary policy usually has an effect, is probably not doing as much as it might usually be expected to do in achieving balanced growth," he said in his opening statement. Stocks turned in another strong performance during trading on Tuesday, extending the upward trend seen over the past several sessions. The gains on the day once again lifted the tech-heavy Nasdaq to a new fourteen-year closing high. President Barack Obama revealed Monday that he is dispatching Attorney General Eric Holder to Ferguson, Missouri, amid ongoing violence in the St. Louis suburb. Obama said Holder will travel to Ferguson on Wednesday to meet with the FBI agents and Justice Department personnel conducting an investigation of the shooting death of Michael Brown.
comments powered by Disqus
FREE Newsletters, Analysis & Alerts

 

Stay informed with our FREE daily Newsletters and real-time breaking News Alerts. Sign up to receive the latest information on business news, health, technology, biotech, market analysis, currency trading and more.