The experts observed that the proposed increase in the reservation price at the auction of the 90% gold value of the gold value of the existing 85% supports better recovery rates, thus improving customer protection. | Photo credit: Istockphoto
Banks will retain their competitiveness in gold loans in loan loans in the face of non -banking financial companies (NBFC), according to ICRA assessment of the instructions of RBI drafts on loans against the gold guarantee.
In addition, it is likely that Doorstep gold loans and recruitment agreements for banks and NBFC are affected by strict requirements for the management and storage of the gold guarantee.
While banks have been given a free hand to offer all income -generating loans, including agricultural gold loans, with the LTV ratio (value loan) determined by its internal policy and not restricted to 75 percent, the qualification agency indicated that NBFCs will have to maintain a 75 percent LTV for all gold loans income).
The LTV relationship is the relationship between the pending amount of the loan, including any ridiculous interest and without eating, to the value of collateral security.
According to the draft guidelines, the prescribed LTV relationship must be maintained in an ONBOng basic through the loan tenor. In case of non -compliance with the regulatory LTV ratio, if the violation persists for more than 30 consecutive days, all the pending amount will attract a supply of additional standard assets of 1 percent.
ICRA does not expect any significant impact on NBFC due to these incremental supply requirements.
However, the agency warned that growth would be affected as entities are sacrificed according to collateral value at the time of origin. However, never, the tight LTV requirements would safeguard the lender from acute movements in gold prices.
In the case of the reimbursement loans of the bullet (where the main one, due to the reimbursement to the expiration of the loan), it is proposed that the LTV ratio be calculated by dealing with the total amount reimbursable by the borrower at the expiration of the expiration rather sanctioned by the original.
“Consequently, the NBFC would have to sanction lower amounts (up to 25 percent of fish-à-peppers From BFSI, the people at the height of the BFSI, the people at the height of the BFSI, the people of the BFSI of the BFSI, the people of the height of the BFSI of the BFSI, the people of the height of the BFSI of the BFSI, the people of the height of the BFSI, the BFSI of the BFSI. AM KARTHIK, Senior Vice President (Chief of CO groups).
For example, for the reimbursement tasks of the 12 -month bullet with an annual yield of 20 percent, NBFC could lend only to 62 percent of gold value fish, up to 75 percent, being cited according to current practice.
Documentary evidence
Referring to the mandatory requirement of documentary evidence for all income generating loans, and consumer loans above a threshold amount decided by the lender’s policy, experts said that this will lead to higher operational costs for lenders with focus on the first.
Touching the proposal requesting the lenders to maintain a registration of verification of the guarantee ownership for all the accounts, Srinivan and Karthik expect an increase in the operational rigor, giving that a company or adequate document has that maintenance maintaining a record of verification of the property of the gold collaterals more than 20 grams).
Experts observed that the proposed increase in the reserve price at gold guarantee auctions at 90 percent of the gold value of existing 85 percent are expected to support better recovery rates, thus improving customer protection.
Nuncaberness, noticed that the auction experience of historical entities suggests healthy recovery trends, possibility of limiting significant failures in the auction.
In the proposal clause that does not allow loans against the requisitioned gold guarantee, ICRA experts said that this will restrict loans to the pawn helmets, lenders and other lenders. This movement aims to improve the protection of the retail borrower.
Regarding the proposal to limit the tenor of consumption loans in the nature of bullet reimbursement loans at 12 months, they hope that the loans of consumption of large tickets will be built, given the restricted tenors.
Last September, ICRA predicts that the gold loan portfolio organized with banks and NBFC will exceed the ₹ 10 Lakh Crore in fiscal year 2015, projecting it to reach the ₹ 15 Lakh Crore in March 2027.
Posted on April 13, 2025
