Rules to be strict: RBI found flaws in gold valuation and loan
New Delhi| It may be difficult to give loans against gold to banks and financial institutions. The Reserve Bank of India i.e. RBI is now planning to tighten the rules related to this. In this, instructions can be given to follow underwriting procedures and use the money properly.
RBI had found many irregularities in gold loans in September last year. In recent times, debt against gold has increased very rapidly. In such a situation, RBI wants to control it. The central bank also wants banks and non-banking financial institutions (NBFCs) to conduct background checks on borrowing customers. Find the ownership rights of the gold being pledged. RBI wants to ensure that institutions follow standard protocols and no growth in the gold loan sector is out of bounds.
Fintech agents of banks were collecting gold and was storing and weighing it. According to the rules, all this work should be done by banks or lending institutions. Banks were also auctioning gold without informing the customers who did not repay the loan. From September, 2024 to December, banks’ gold loans registered a 50 per cent increase, exceeding the growth of overall loans. During this investigation, RBI had found flaws in the valuation of gold along with the loan.
