RBI restricts lending against gold bullion In Indian Markets
New Delhi: The Reserve Bank of India (RBI) on Friday restricted lending against primary gold, such as gold bullion, citing broader macro-prudential concerns and the speculative and non-productive nature of such assets.
However, regulated entities (REs) are permitted to extend loans against collateral in the form of gold jewellery, ornaments, and coins to meet the short-term financing needs of borrowers. The RBI noted that prudential and conduct-related regulations for such loans have been issued over time for various types of REs.
While the RBI’s core regulatory philosophy remains consistent across entities, the rules differ in some respects due to variations in institutional mandates and risk-taking capabilities.
The existing regulations are intended to provide borrowers with access to liquidity by leveraging idle gold jewellery, ornaments, or coins, while also managing the associated risks for lenders. Similar concerns have shaped past regulations related to lending against silver collateral.
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