Gold Loan Update: It will become difficult to get gold loan, RBI is going to take a big decision..

If you are thinking of taking a gold loan, then this news is important for you. The Reserve Bank of India (RBI) may soon issue new guidelines to tighten the process of gold loans. This step will apply to banks and non-banking finance companies (NBFCs), so that transparency and security can be increased in gold loans.

Why is a strict gold loan process necessary?

Gold loans are one of the most popular and easy loan options in India. People can get money quickly by pledging jewelry when needed. But in recent years, many cases of fraud and manipulation have come to light, in which loan lending companies have violated the loan-to-value (LTV) ratio.

According to reports in the Economic Times, RBI wants to ensure that loan lending companies follow the rules properly and customers are protected from unnecessary risks.

Which rules can be made strict?

Loan-to-Value (LTV) Ratio: Currently, banks are allowed to lend up to a maximum of 75% of the value of gold. This limit may be tightened further. Quality check of gold: Banks and NBFCs will now have to check the purity and weight of gold more strictly so that loans are not given in exchange for fake or adulterated gold. Loan repayment rules: Some NBFCs were distributing gold loans in an unsecured manner, which increased the risk of default. RBI can strengthen the loan repayment process to stop this. Change in valuation process: Now you may be asked to adopt a standard and transparent process to determine the value of gold so that arbitrary valuation can be prevented.

What will be the impact on customers?

Taking a gold loan may be a little more difficult and time-consuming than before.
The loan amount may be less, as the valuation process will be strict.

Interest rates may increase, as the pressure of rules will increase on NBFCs and banks.

More documents may be required to approve the loan.

This move of RBI is to protect the interests of both customers and banks. Although this will bring some strictness in the loan process, it will reduce fraud and default cases. If you are thinking of taking a gold loan, it may be beneficial to consider your options as soon as possible.

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