Larger gold loan players less impacted by Reserve Bank of India advisory

While banks are dominant in jewellery-backed agriculture loans, NBFCs lead in retail gold loans and are expected to expand at 17-19 per cent in FY25

The Reserve Bank of India (RBI) has issued an advisory for entities giving gold loans (GL) where it identified irregular practices and gave three months for lenders to correct these and avoid supervisory action.

The review revealed irregularities like improper use of third parties for loan sourcing, gold valuation without the customer’s presence, poor due diligence, lack of transparency in auctions, weak monitoring of loan-to-value (LTV) ratios, and incorrect application of risk weights. Threat of RBI action could impact growth in GL and impose additional costs on lenders. But larger entities will be less affected. 

Prior to