Proposed RBI norms may hit gold-loan NBFCs in near term: Analysts

The Reserve Bank of India’s (RBI’s) draft guidelines on gold loans, if implemented in their current form, are expected to impact non-banking financial companies (NBFCs) and mid-tier banks in the near term, more significantly than larger banks, according to analysts.

 

Some analysts noted that gold loan financiers may consider increasing interest rates on such loans. However, intense competition among existing players and new entrants like Cholamandalam, L&T Finance, and Poonawalla Fincorp could limit the extent of any rate hikes.

 

In the draft guidelines, the RBI has proposed norms covering loan purpose classification and strict end-use monitoring; loan-to-value (LTV) ratios and