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What is the new rule of RBI for gold loans?

New Delhi, RBI's draft report to prevent gold jewelry loan fraud The Reserve Bank has recently released a draft report with a view to reforming the gold jewelry loan business.

What is the new rule of RBI for gold loans?
jewellery loan new rule

What is the gold policy of RBI?

Banks, non-banking financial institutions known as NPSCs, cooperative banks, regional rural banks, etc. are currently involved in the gold jewelry loan business.

Among these, arbitrary extension or reduction of the loan period, differences in the valuation of the jewelry, security of the mortgage jewelry, and determination of the jewelry loan amount differ among banks and financial institutions.


Key changes in gold and jewellery loans

Banks and financial institutions are not allowed to provide loans on gold and silver bars

No loans are allowed on exchange-traded ETFs and mutual fund units

Loans are allowed on gold jewellery and coins as they are easily convertible

Loans should be given based on the borrower's repayment capacity

If there is any doubt as to whether the jewellery belongs to the borrower, the loan should not be given

The purity tests of gold jewellery and coins must be of a standard

Jewellery loans should be given for a maximum period of 12 months only

A person is not allowed to pledge jewellery weighing more than 1 kg

A person is not allowed to pledge more than 50 grams of currency

No loans are allowed on low-carat gold

Cooperative and regional rural banks can provide a maximum of Rs 5 lakh to an individual.


The Reserve Bank also continues to receive complaints regarding fraud in gold jewelry mortgage loans. Hence, the RBI has released a draft report with a view to regularizing the gold jewelry loan business.

The RBI said that this circular is being issued to prevent fraud, irregularities and misuse in the gold and jewellery loan business, improve the credit business and ensure bilateral security.

It has also been said that the public can express their views on this on the RBI website.

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