RBI: NBFCs Reduce Gold Loan Amount As Gold Price Heads South
: The gold loan SNBFC
have reduced the maximum loan amount compared to the jewelry
following the fall in gold prices. The RBI directive capping the loan granted to the value of jewelry
at 60% arrived at the beginning of last year. But as gold prices rose, the Association of Gold Loan Companies, India (AGLOC
), a organization
a major gold loan NBFC
who decides the maximum loan amount for the week, had to set a higher amount. The maximum loan amount has increased to Rs
2,050 by gram
in November 2012.
But now the association has set the maximum amount at Rs 1,800 per gram, the lowest for about a year. The price is set after taking into account the cost of manufacturing the set. Members say demand for loans continues to be strong despite the reduction in the amount lent per gram of gold. Allaying fear of defaults with falling gold prices, AGLOC Chairman George Alexander
stated that there is a regular repayment of past loans sanctioned at a higher amount per gram of gold. According to him, the association is closely monitoring the evolution of the price of gold to report any change in the maximum loan amount per gram of gold. Immediately after the RBI’s directive on the 60% cap, the NBFCs reduced maximum interest rates from 24% to 22-23% to attract more customers as banks were exempt from the restriction. The NBFCs have not changed interest rates so far.