RBI Gold Loans: The Reserve Bank of India (RBI) said on Monday that it has found many irregularities in the functioning of the institutions giving loans against gold and has asked them to review their policies and portfolios.

RBI Gold Loans: The Reserve Bank of India (RBI) said on Monday that it has found many irregularities in the functioning of the institutions giving loans against gold and has asked them to review their policies and portfolios. In a message sent to the lenders, the central bank said that a recent review on compliance with prudential guidelines has revealed many flaws about gold ornaments and loans given against the pledge of ornaments.

RBI found these flaws in gold loans

According to RBI, flaws have been found such as deficiencies in the use of third parties for sourcing and evaluation of loans, evaluation of gold in the absence of the customer, inadequate investigation and monitoring of the end use of gold loans, and lack of transparency during auctioning of gold ornaments in case of default.

Increase in gold loans.

A recent study by rating agency ICRA said that despite the recent steps taken by RBI, there has been a good increase in gold loans and the portfolio of organized lenders is expected to reach Rs 10 lakh crore by March 2025. RBI advised all the institutions involved in the business of lending loans against gold to do a 'comprehensive review' of their policies and procedures, identify deficiencies and initiate appropriate corrective measures 'in a timely manner'.

Answer has to be given within 3 months

According to the RBI notification, it should also be ensured that these institutions have adequate control over the 'outsourced' activities and third party service providers. It states that the institutions providing gold loans can inform the senior supervisory manager of RBI about their action within three months. The Reserve Bank will take seriously the non-compliance of the guidelines in this regard.