Ahmedabad: If the draft guidelines of the Reserve Bank on gold loans are implemented in their current form, then the cost burden on banks and non-banking financial companies (NBFCs) may increase. Banking experts have expressed the opinion that it will now become expensive to take loans in exchange for gold. According to these draft guidelines, banks and NBFCs have to complete standard paperwork in all their branches. Apart from this, institutions providing loans for gold in lieu of gold will also have to adopt concrete recovery and calculation method so that there is no scope for any kind of lapse.
Sources in an NBFC providing gold loans said that the cost of collection, paperwork and calculation process etc. is 2%. But if the draft guidelines of the Reserve Bank are implemented in their current form, then this cost will increase from 4 to 5 percent. The branches will have to complete the standardization process soon, which will increase the cost of the gold loan acceptance process.
According to the draft guidelines, lender institutions will have to prepare a standard procedure to check the purity of gold, its weight (both gross and pure), etc. This method will be equally applied to all branches of the lender concerned. Apart from this, institutions will have to appoint such examiners whose previous work has been unfair to check gold.
According to the new guidelines, the lending institutions will also have to ensure that there is no difference in the method of calculating the purity of gold and the method of calculation of gold at the time of auction or in the event of a loan repayment or lapse.
Experts say all these situations will increase the operational cost of banks and NBFCs as they have to appoint specialist people as reviewers.
The post gold loan likely to be more expensive now: RBI’s new rules will increase the cost first appeared on News India Live | Breaking India News, The Indian Headline, India Express News, Fast India News.
