Reserve Bank of India (RBI) Governor Sanjay Malhotra clarified that the central bank does not intend to tighten the norms for gold loans but aims to rationalize them. During a media interaction, he emphasized that the proposed guidelines are focused on harmonizing regulations across various types of regulated entities, such as banks and Non-Banking Financial Companies (NBFCs), while considering their differential risk-bearing capabilities.
Gold loans, which are extended against the collateral of gold jewelry and ornaments, serve both consumption and income-generation purposes. The RBI plans to issue comprehensive regulations on prudential norms and conduct-related aspects for such loans. These guidelines will be released in draft form for public consultation before being finalized based on feedback.
Governor Malhotra highlighted that the rationalization process is primarily aimed at aligning the conduct-related guidelines for NBFCs with those for the banking sector. He assured that this move is not a tightening of norms but a step towards ensuring consistency and addressing concerns observed in the gold loan segment.
The announcement comes at a time when the gold loan portfolio has seen significant growth, coinciding with a record rise in gold prices. This rationalization is expected to streamline the lending process and address unfair practices while maintaining the sector’s growth trajectory.
