RBI Governor has given an update on gold loan rules. He said that the final rules for gold loans will be issued soon. The main point is that now for loans up to ₹2.5 lakh, only a declaration of ‘ownership’ will be enough. No credit check will be needed for this.
Governor Malhotra said that the rules issued earlier were only drafts, not final. He also said that some institutions were not following the current gold loan rules. That is why it became important to make the rules more clear and strict.
This much gold needed for ₹2.5 lakh loan
The RBI Governor said that for small gold loans up to ₹2.5 lakh, only the customer’s self-declared ownership will be valid. About 2.5 lakh such loans can come under this rule. The loan-to-value (LTV) ratio has been fixed at 85%. Earlier, some NBFCs and small banks were giving loans at up to 88% value.
An 85% LTV means if you pledge gold worth ₹100, you will get ₹85 as a loan. Based on this, if someone wants a loan of ₹2.5 lakh, they must pledge gold worth around ₹2.94 lakh.
Review of Type-I NBFC rules
RBI said these new rules will make gold loans more secure and regulate the sector better. The Governor also said there will be no change in the rules for FII investment in banks right now. But the rules for Type-I NBFCs will be reviewed, and changes may be made if needed.
With these new rules, small borrowers will get both safety and ease in taking gold loans.