The concern of the gold loan customers ended on 6 June. RBI Governor Sanjay Malhotra made a big announcement. He said that loan-to-value (LTV) for gold loan up to Rs 2.5 lakh will be 85 percent. LTV will be 75 percent for more amount loan loans. Millions of such people have breathed a sigh of relief from this announcement of Malhotra, who used to take loans by keeping their gold jewelery when they suddenly needed money. However, it is necessary to keep in mind that RBI has given relief in LTV only on the gold loan of small amounts. 75 percent LTV rule will be applicable on gold loan of more than Rs 2.5 lakh.
How will RBI get the benefit of the relief given?
The relief that RBI has given to small customers of gold loan can easily understand it with the help of an example. Suppose a person suddenly needs money for treatment. He has no other way but to take a gold loan. He takes his gold jewelery to banks or gold loan companies. The gold loan company costs its gold jewelery value of Rs 2,00,000. Gold loan company can offer a loan of Rs 1.70 lakh on its gold jewelery. Since RBI has given LTV to 85 per cent for loans up to Rs 2.5 lakh, it will get a loan of Rs 1.70 lakh instead of Rs 1.5 lakh (if LTV 75 per cent).
What did the bankers say on RBI draft?
In fact, the RBI introduced the draft of the new rules of Gold Loan on 9 April. There has been a lot of discussion about this draft in the financial sector. Especially bankers have reacted a lot to this. They believe that this rule can cause problems to those who suddenly take a loan to meet the need for money and take a loan. With this, people who meet their needs by taking gold loan can again go to the usurers, who charge a lot of interest on debt.
ALSO READ: Gold Loan Companies: Shares of Gold Loan Companies with this announcement of RBI on the seventh sky
What will be LTV for gold loan of more than 2.5 lakh rupees?
The central bank has reduced LTV to 85 per cent for loans up to Rs 2.5 lakh to provide relief to small customers of gold loan. If a person wants to take a gold loan of more than Rs 2.5 lakh, then LTV will be 75 percent for him. This means that the bank or the gold loan company will offer it as a loan of 75 percent of its gold jewelery value as a loan. The RBI has tried that due to the new rules of gold loan, there was no problem in front of those who take the loan of small amount.