News Column

Norms for loan against gold relaxed

July 23, 2014



THE Reserve Bank of India (RBI) gave commercial banks the freedom on Tuesday to decide the cap on quantum of loans sanctioned against the pledging of gold ornaments and jewellery. On December 30, banks had been told to restrict loans of up to ` 1 lakh against pledge of gold ornaments and jewellery.

"Banks, as per their Board approved policy, may decide upon the ceiling with regard to the quantum of loans that may be granted against the pledge of gold jewellery and ornaments for non- agricultural end uses," RBI said in a notification. However, the period of such loans should not exceed 12 months from the date of sanction, the Central bank added.

The "loan to value" limit shall be maintained at 75 per cent, which means that the borrower will get a loan only to the extent of 75 per cent of the value of gold pledged.

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Source: Mail Today (India)


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