- 07 Mar 2025
- ICICIdirect Research
THE RESERVE BANK OF INDIA IS PLANNING STRICTER RULES FOR GOLD LOANS
News: The Reserve Bank of India is planning stricter rules for gold loans to ensure responsible lending and prevent misuse. Banks will be required to follow a standardized process for approving gold loans, conduct thorough background checks on borrowers, and verify the ownership of pledged gold. Additionally, they must track how the loan amount is being used. This comes as gold loan demand has surged by 50% since September 2024, far exceeding overall loan growth. RBI audits found irregularities, such as improper gold valuation and handling by third-party agents. To maintain financial stability, the RBI may introduce stricter monitoring and documentation requirements, including tracking auctioned gold through receipts.
View: While stricter regulations and compliance might impact AUM growth and result in higher opex, however, probability of asset quality volatility would be minimised.
Impact: Neutral