RBI's new guidelines for gold loan NBFCs
Mar 28 2012, 12:04 | By CNBC-TV18
The RBI is concerned about the unbridled growth of NBFCs engaged in gold loan business.
The Reserve Bank of India issued new fair practice guidelines for the MFI and gold loan NBFCs (Non-banking finance companies) under which these companies will have to ensure that adequate due diligence is carried out On customers.
According to the new rules, prior notice has to sent out to gold loan borrowers if non-payment of loans compel NBFCs to auction jewellery kept as collateral. The NBFCs will have to announce the auction via advertisement placed on at least two newspapers and they cannot participate in such auctions.
In addition, pledged gold will have to be auctioned only via board-approved auctioneers and the loan agreement shall also disclose auction procedure details.
The guidelines further states that jewellery taken as collateral needs to be appropriately insured and the NBFCs must ensure an adequate system for storing them in safe custody.
Below are the key points of the guidelines
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