Friday, May 3rd 12:24 PM IST

RBI to restrict loan against Gold coins

# RBI  # India gold  # NBFC  

This move, if implemented would imply that a customer cannot avail loans against gold coins that weigh more than 50 grams.

NEW DELHI(BullionStreet): As part of it's guidelines to banks regarding gold loans, India's central bank, the Reserve Bank of India (RBI) proposed that banks restrict the facility of advancing loan against gold coins to a maximum weight of 50 grams.

This move, if implemented would imply that a customer cannot avail loans against gold coins that weigh more than 50 grams.

As per extant instructions, banks are currently permitted to grant advances against gold ornaments and other jewellery and against specially minted gold coins sold by banks.

However, no advances can be granted by banks for purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold exchange traded funds and units of gold mutual funds.

"While there may not be any objection to grant of advances against specially minted gold coins sold by banks, there is a risk that some of these coins would be weighing much more, thereby circumventing the Reserve Bank's guidelines regarding restrictions on grant of advance against gold bullion," the bank said.

Earlier, the central bank said it is looking into sale of gold coins and gold-related investment products by about 30 banks to find out whether their employees are mis-selling such products to customers.

The RBI move follows complaints of customers being induced by bank employees and non-staff members within bank premises for purchase of gold coins, gold-related investment products and other wealth management schemes.

The detailed guidelines for the same will be issued by end-May 2013

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