NBFCs can refer to price on bourses for lending against gold

The Reserve Bank on Thursday allowed Non-Banking Financial Companies (NBFCs) to use gold price at commodity exchange to determine the value of the metal for purpose of advancing loans against it.

Mumbai: The Reserve Bank on Thursday allowed Non-Banking Financial Companies (NBFCs) to use gold price at commodity exchange to determine the value of the metal for purpose of advancing loans against it.

"...NBFCs may also use the historical spot gold price data publicly disseminated by a commodity exchange regulated by the Forward Markets Commission.

Currently, the valuation of gold jewellery for arriving at the Loan-To-Value (LTV) is be done at the average of the closing price of 22 carat gold for the preceding 30 days as quoted by the Bombay Bullion Association (BBA).

NBFCs lend up to 75 percent of the value of gold to customers.

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