​Loan-to-Value Ratios in Gold Loans

On 16th May, 2024, the Reserve Bank of India (RBI) issued a stern directive to non-banking financial companies (NBFCs) involved in gold loans, urging them to adhere strictly to regulations concerning loan-to-value ratios, auction procedures, and cash disbursements.

  • The RBI has urged NBFCs to conduct transparent auctions in cases of non-payment, ensuring that individuals whose gold is being auctioned are informed and can participate physically at the taluka level.

Understanding Loan-to-Value Ratios (LTV)

  • It is the ratio of the loan amount sanctioned to the value of the gold deposited as collateral.
  • The value of the gold used as collateral is based solely ....
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