Latest News | RBI Increases LTV Ratio for Gold Loans to 90 Pc
Get latest articles and stories on Latest News at LatestLY. In order to ease the liquidity crunch faced by households and small businesses because of the COVID-19 pandemic, the Reserve Bank on Thursday raised loan to value ratio (LTV) for gold loans offered by banks for non-agricultural purposes to 90 per cent from the existing 75 per cent.
Mumbai, Aug 6 (PTI) In order to ease the liquidity crunch faced by households and small businesses because of the COVID-19 pandemic, the Reserve Bank on Thursday raised loan to value ratio (LTV) for gold loans offered by banks for non-agricultural purposes to 90 per cent from the existing 75 per cent.
This enhanced LTV ratio will be applicable up to March 31, 2021 to enable borrowers to tide over their temporary liquidity mismatches on account of COVID 19, the RBI said.
Also Read | 'Tharoorosaurus': Shashi Tharoor's Latest Book Is Collection of 'Quirky' Words And Stories Behind Them.
"With a view to further mitigate the economic impact of the COVID-19 pandemic on households, entrepreneurs and small businesses, it has been decided to increase the permissible loan to value ratio (LTV) for loans against pledge of gold ornaments and jewellery for non-agricultural purposes from 75 per cent to 90 per cent," RBI said in its 'Statement on Developmental and Regulatory Policies'.
The central bank said fresh gold loans sanctioned on and after April 1, 2021 shall attract LTV ratio of 75 per cent.
Bankers said this is a measure to monetise gold ornaments and jewellery available with people, and will help in improving liquidity and lendable resources.
"Jewel loan has been one portfolio which has been performing very well in almost all banks. NPA (non-performing assets) in the segment is low as asset quality is very good," Indian Bank Managing Director and CEO Padmaja Chunduru said.
Kotak Mahindra Bank's group president (consumer banking) Shanti Ekambaram said increasing the permissible LTV for gold loans to 90 per cent till March 31, 2021 will help households facing a cash crunch.
Terming it a progressive step, CSB Bank CEO and MD CVR Rajendaran said it should boost the demand for gold loans and will help banks to grow their books.
"While this move will help broaden the gold loan market, we will also witness an increased competition in this segment," he said.
Lenders will need to ensure that their valuation and risk management processes remain tight and robust, he added.
Crisil Ratings Senior Director Krishnan Sitaraman said gold loans by banks will get a fillip from the increase in permissible LTV.
"It is expected that gold loans will be one of the preferred options for raising funds in the current environment for many borrowers as individuals and micro enterprises go for it to meet immediate funding needs," he said.
However, with gold prices at all-time high, banks may be wary of increasing LTV all the way to 90 per cent, he stated.
Sitaraman said as LTV relaxation is not applicable to non-banking financial companies (NBFCs) as of now, some of the incremental demand witnessed by them may move to banks on account of higher value realization.
"Of course, this is subject to banks meeting the short turnaround times and seamless disbursal process that the NBFCs are known for and their customers are used to," he added.
Icra's sector head (financial sector ratings) Anil Gupta said banks may be cautious as gold prices have rallied sharply in the recent past and they will have to revert to the earlier LTV norms next fiscal. PTI HV RVK 08062115 NNNN but the decision was changed to a straight red and a free kick after a VAR consultation.
However, TV replays showed little if no contact.
Frankfurt's second goal in the 62nd was arguably the goal of the round. Japanese midfielder Daichi Kamada dribbled past three Hertha defnders and cut the ball back for André Silva to score with the back of his heel.
Perhaps inspired, Danny da Costa eluded four Hertha defenders before setting up Evan Ndicka for Frankfurt's third in the 69th. Silva wrapped it up in the 86th.
Also, Freiburg came from behind to draw in Wolfsburg 2-2. (AP)
(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)