The implementation of the guidelines proposed in the RBI draft on gold loans will slow down the growth of non -bank financiers in the segment, according to a report published on Tuesday.
According to a Crisil report, the draft focuses on the loan to the value (LTV) and the renovation/recharge of bullet loans that can have a relationship with the growth of the loans of non -bank financial companies (NBFC) that are dedicated to providing gold loans.
The draft was issued in April with the intention of harmonizing the regulatory framework between the entities and addressing the differences in loan practices.
Crisil said that the draft comes in the context of RBI, in September 2024, highlighting irregular practices in the midst of a significant increase in the gold -loan jewelry portfolio or some lenders. He had asked the lenders to integrally review their policies, processes and practices to identify gaps and initiate corrective measures in a temporary time mann
In fiscal year 2015, the good general loan for systems comes in 50 percent, which includes more than double the portfolio for banks, he said.
“The instructions on the calculation and violations of LTV can affect the growth prospects of the NBFC of gold press, since they have to recalibrate their disbursement values,” said the agency director, Malvika Bhotika.
For bullet loans, the agency expects LTV in disbursement to reduce 65-68 percent currently to 55-60 percent to take into account accumulated interests and guarantee compliance with LTV.
“This will mean a lower disbursement of loans for the same value of gold jewels,” Bhotika said.
NBFCS can also analyze the collection of periodic interests of its customs to administer LTV, he said, adding that thesis entities can decide to focus on EMI -based products, said Bhotika.
On the other hand, the additional supply of LTV’s violations, Althehehe that currently for gross assets of stage 1 maintained by most NBFC, is unlikely to have a significant impact on profitability.
Another important direction is in the renovation process of loans and/or recharge. Renewal or recharges in bullet reimbursement loans can only be extended after reimbursement of all accused interest. This will reduce the flexibility of the borrowers and reduce the capacity of the NBFC to renew/recharge sewing loans, the agency said.
The instructions are expected to strengthen the sector about time, the agency said.
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Posted on May 6, 2025
