RBI panel suggests stricter norm for gold loan firms
By Vaibhav Aggarwal
Jan 3, 2013
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A panel of the Reserve Bank of India ha suggested various measures to make the gold finance sector more transparent while doing business. This is done to check the mushrooming of gold finance companies.

RBI has set up a group under the chairmanship of Mr. K U B Rao, a senior executive to study issues related to gold and gold loans by non-banking finance companies (NBFCs). The draft report has been published on the RBI website for suggestions.

The gold loan companies should consider only the price of gold and not the jewellery making charges and other taxes in determining the value of the gold. Presently, different NBFCs have different methods to arrive at the value of pledged gold.

The gold loan companies should increase Loan to value ratio (LTV) cap to 75% from existing 60%. They should also standardize the circulation of ‘value' in LTV.

Loans above Rs 2 lakh should be given by cheque and a copy of the PAN card of the borrower obtained.


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