Gold Loan News- Reserve Bank of India was continuously receiving complaints that NBFCs were violating the rules in giving gold loans. Keeping this in view, the Central Bank has now increased surveillance.
New Delhi. The Reserve Bank of India (RBI) has now started taking strict action regarding gold loans. In particular, the Central Bank has increased its surveillance on non-banking financial companies (NBFCs). RBI wants that NBFCs should strictly follow all the rules made by the bank while giving gold loan. In March, RBI had stopped IIFL Finance from issuing new gold loans due to violation of rules. Due to the strictness of RBI, the common man may face some difficulty in getting gold loan and it can also have an adverse effect on the business of NBFCs.
The Reserve Bank of India was continuously receiving complaints that NBFCs were violating rules in giving gold loans. According to RBI rules, only 75 percent of the total value of the pledged jewelery can be given as loan. But, many non-banking financial companies are giving loan amount to the customer more than the prescribed limit. Also, the loan amount is being given in cash instead of depositing it in the customer’s bank account. RBI has now told NBFCs that they will deposit loan amount more than Rs 20,000 in the bank account of the borrower only.
What will be the effect of strictness?
This strictness of the Reserve Bank of India will have a very negative impact on the gold loan portfolio of non-banking financial companies. Gold loan business was growing due to instant cash loans being given by NBFCs. Due to this ban, gold loans of NBFCs will no longer be attractive. Second, NBFCs are giving more loan amount against gold than banks. Due to the strictness of RBI, now they will be able to give loan only 75 percent of the value of gold. This will also affect the gold loan business.
Customers taking gold loans will also be affected. Now he will get less loan on gold jewelery than before. Apart from this, due to the strictness of RBI on gold loan, he will also have to do more paperwork. Due to this, there is a possibility that getting the loan will take longer than before.
Gold loan business increased four times
After the Corona epidemic, there has been a huge boom in the gold loan business of NBFCs and it has increased by almost four times. During Corona, RBI had given some relaxation in giving gold loans to NBFCs. At that time, NBFCs could give loans up to 90 percent of the total value of the pledged gold. In the financial year 2020, the gold loan business of NBFCs was Rs 35,000 crore. It will increase to Rs 1,31,000 crore in financial year 2023.
