The much-awaited, final set of revised gold loan regulations should be out by today or Monday, Reserve Bank of India (RBI) Governor Sanjay Malhotra said on June 6 during the MPC press briefing, sending shares of gold financiers higher after the regulator confirmed the loan-to-value (LTV) for gold loans of up to Rs 2.5 lakh would be pegged at 85 percent.
“We will release the final norms on gold loans by today or Monday,” Malhotra said, adding that the new regulation will ensure gold loans of up to Rs 2.5 lakh will not need any credit appraisal, and if borrower don’t have invoice of gold, then self-declaration can be submitted.
Malhotra said the Loan-to-Value (LTV) for gold loans below Rs 2.5 lakh will be revised to 85 percent, from the proposed 75 percent as part of the latest recommendations. After the announcement by the RBI on gold loan norms, share of Muthoot Finance, Manappuram Finance, and IIFL Finance, have surged. Read More
Last month, the Ministry of Finance had examined the draft RBI guidelines on gold loans and suggested the requirements of small borrowers who avail credit of up to Rs 2 lakh should not be adversely affected. The Department of Financial Services also said the norms will be suitable for implementation from January 1, 2026, it added.
The DFS also suggested exclusion of small-ticket borrowers from these proposed directions in order to ensure ‘timely and speedy disbursement of loans’ for them.
On May 19, Moneycontrol reported that lenders had raised concerns to the RBI over the draft guidelines on lending against gold collateral. Sources said that the guidelines were expected to have an impact on the financials of lenders. The industry also feared of delays in disbursements, effectively ending their 15-minute gold loan disbursement schemes.
The industry players had asked the central bank to have a relook at a few guidelines before releasing the final norms.
RBI’s draft norms required lenders to include an appropriate single-borrower as well as sectoral limits on the loan extended against gold collaterals. The draft rules also required lenders to put in place a mechanism to check the end-use of loans, as well as measures relating to the Loan-to-Value (LTV) ratio, valuation of gold and standards pertaining to gold purity.
The draft guidelines also required lenders to seek a detailed trail of documentation, including income proof, for credit underwriting. Under the draft framework, lenders were required to track the end-use of loans. All these measured played on the fear that the process of sanctioning and disbursing gold loans may become cumbersome, taking away the efficiencies brought into the system in recent years.
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