The Reserve Bank of India (RBI) on Monday said that it has found several irregularities in the functioning of institutions lending against gold and has asked them to review their policies and portfolios. In a message sent to lenders, the Central Bank said that a recent review on adherence to prudential guidelines has revealed several lapses in relation to loans given against gold jewelery and jewellery. Let us also tell you what the Reserve Bank of India has said?
RBI found flaws
According to the RBI, deficiencies in the use of third parties for sourcing and valuation of loans, valuation of gold in the absence of the customer, inadequate due diligence and lack of tracking of end-use of gold loans and gold jewelery in case of defaults were Flaws like lack of transparency have been found during the auction. A recent study by rating agency ICRA said that despite the recent steps taken by the RBI, there has been a good growth in gold loans and the portfolio of organized lenders is expected to reach Rs 10 lakh crore by March 2025.
Strict guidelines issued
RBI advised all institutions involved in the business of lending against gold to comprehensively review their policies and procedures, identify shortcomings and initiate appropriate corrective measures in a time bound manner. According to the RBI notification, it should also be ensured that these entities have adequate control over the outsourced activities and third party service providers. It says that gold loan lending institutions can inform the Senior Supervisory Manager of RBI about their action within three months. The Reserve Bank will take serious note of non-compliance of guidelines in this regard.
