NBFCs happier on RBI easing lending amounts on pledged gold jewellery

Non-banking financial companies (NBFCs) are happier now as the Reserve Bank of India has raised the amount of loan that they can offer against pledge of gold jewellery, reports say. From its earlier restriction of allowing these companies to lend only upto 60 percent of the value of the pledged gold jewellery, the new rule permits loan upto 75 percent, reports add.

Operators in this segment like Muthoot Finance and Manappuram Finance are optimistic of a growth in their lending business. With the RBI curtailing the value of loan o 60 percent in 2012, the business of Muthoot Finance had fallen almost 14 percent, to the unorganised sector, reports say.

The RBI noted that the value of the jewellery to ascertain the maximum permissible loan amount will pertain only to the intrinsic value of the gold content and no other cost elements should be added, reports suggest.