In view of the feedback received after public consultations, the Reserve Bank of India (RBI) has relaxed certain aspects of the earlier draft guidelines on gold loans in the final norms.
The regulator said lenders must now maintain 85 per cent loan-to-value (LTV) ratio for consumption related gold loans below Rs 2.5 lakh, as against the earlier proposed 75 per cent. For consumption loans backed by gold as collateral with Rs 2.5 lakh-Rs 5 lakh ticket size, the LTV ratio has been mandated at 80 per cent, while for loans above Rs 5 lakh, the LTV ratio has been maintained at 75 per cent. The prescribed LTV ratio shall be maintained on an ongoing basis throughout the tenor of the loan, the RBI said.
“A lender may decide on a suitable approach for lending against eligible collateral as part of its credit risk management framework, consistent, inter alia, with the principle of proportionality and ease of access for small ticket loans. However, detailed credit assessment, including assessment of borrower’s repayment capacity shall be undertaken in case the total loan amount against eligible collateral is above ₹2.5 lakh to a borrower,” the regulator said.
Lenders may renew an existing loan or sanction a top-up loan upon a formal request from the borrower and subject to a credit assessment, within the permissible LTV, and provided the loan is classified as standard. Further, renewal of bullet repayment loan shall be allowed only after payment of accrued interest, if any. The lender shall ensure that such renewals and top-ups are clearly identifiable in its Core Banking System or Loan Processing System.
The RBI re-iterated that a lender shall not extend a loan where ownership of the collateral is doubtful. A suitable document or declaration shall be obtained from the borrower in all cases where the borrower is the rightful owner of the eligible collateral.
Multiple or frequent sanction of loans against eligible collateral to the same borrower, amounting to a value which is in excess of a threshold to be decided by the lender, must be examined closely, the RBI said. It added that lenders shall not allow avail loans by re-pledging gold or silver pledged to it by its borrowers. ENDS