Norms for loan against gold jewellery get relaxation

RBI permits banks to decide on limit of quantum of loans against gold jewellery, for non agricultural use
Norms for loan against gold jewellery get relaxation

The Reserve Bank of India (RBI) recently decided to relax norms relating to loans against gold jewellery, reports say. In this, it has relaxed the previous limit of Rs 1 lakh against the pledge of gold jewellery. Also, the RBI has permitted banks to decide on the limit of quantum of loans that can be given against gold jewellery, for non agricultural use, reports say. Although the RBI has noted that the period of the loan should not be over 12 months.

Previously, last year, banks were permitted by the RBI to sanction loans against gold and jewellery with a payment of the full amount on maturity, and that the loan amount limit had to be within Rs.1 lakh. Also, a Loan to Value (LTV) ratio was introduced in which the borrower would receive loan upto 75 per cent of the value of the gold jewellery that was pledged. In the new relaxation, the LTV still remains, reports add. The RBI noted that banks had made representations seeking raising the limit on gold loans for non-agricultural use and norms related to interest and principal payable at maturity, reports add.


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