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RBI tightens norms for gold loans
| 18 September, 2013
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Mumbai, 17 September: Seeking to keep demand of gold under check, the Reserve Bank of India has tightened norms for loans against pledge of gold jewellery.
“In order to standardise the valuation and make it more transparent to the borrower, it has been decided that gold jewellery accepted as collateral will have to be valued at the average of the closing price of 22 carat gold for the preceding 30 days as quoted by the Bombay Bullion Association (BBA),” the RBI said in a notification.
Currently, there is no standard method for arriving at the value of gold accepted as collateral and valuation is arbitrary and opaque. While accepting the gold as collateral, the NBFC should give in writing to the borrower, on their letter head giving the purity (in terms of carats) and weight of gold, it said.
If the gold is of purity less than 22 carats, the NBFC should translate the collateral into 22 carat and state the exact grams of the collateral, it said. In other words, it said, jewellery of lower purity of gold shall be valued proportionately.
The loan-to-value ratio for loans against jewellery will be 60 per cent, it added.
NBFCs financing against the collateral of gold must insist on a copy of the PAN Card of the borrower.     pti

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