RBI serious on huge misappropriation of loans being given in lieu of gold and non-compliance of guidelines
New Delhi| There is a lot of misappropriation in the loans given in lieu of gold. The Reserve Bank of India has found irregularities in loans being given in partnership with fintech companies and business correspondents. It said, action should be taken against such activities. Besides, policies and loan portfolio should also be reviewed.
Reserve Bank of India i.e. RBI said on Monday, we have seen irregularities in many institutions. Our recent review has revealed several shortcomings regarding giving loans by mortgaging gold jewelry. Among the major drawbacks that were found is the sourcing and valuation of loans. Manipulation is also taking place in the third party which evaluates the gold to be held in debt.
Gold is being valued without the presence of a customer, the central bank said. Due diligence is not correct when pledged. The loan is not being properly monitored till the final process. There is a lack of transparency during the auction of gold jewelry. If a customer fails to repay the loan, the procedure is not being followed there also. There are also irregularities in the loan price ratio. Business correspondents are evaluating themselves. Unsafe transportation is being used to transport gold. There is also a lack of KYC compliance.
