Govt carrying misconception on gold NBFCs: AGLOC
Kolkata: Association of Gold Loan Companies (AGLOC), not comfortable with the measures undertaken by the Reserve Bank of India, has said government has a lot of misconception about the industry.
"We do not finance the bullion sector, but the regulator thinks we are financing bullion," AGLOC President and Managing Director George Alexander Muthoot said.
The government is trying to ensure every measure to reduce import of the yellow metal to check current account deficit.
The Reserve Bank of India is also concerned with the phenomenal growth of the sector and asked gold NBFC's to reduce the Loan To Value (LTV) ratio to 60 percent from 80 percent.
Muthoot said the industry is helping monitise the ideal asset and putting money for productive use.
The industry is also helping to bring the sector into organised sector from currently scattered small unorganised lenders, he said.
He said though gold NBFC's gold portfolio is almost half at Rs 45,000-50,000 crore while that of banks is Rs 1,05,000 crore, there is no restriction on them.
"The growth in NBFCs also boosted gold loan market for the banks also," Muthoot said.
The association head said the RBI's cautionary approach had scared the banks in lending freely to gold NBFCs.
RBI has restricted banks to maximum exposure of 7.5 percent of their networth to such NBFCs.
Muthoot urged the government to consider the association's demand in restoring LTV to 80 percent.