The Reserve Bank of India (RBI) on September 30, 2024, notified regarding the irregular practices observed in the grant of loans against the pledge of gold ornaments and jewellerly.
The following has been stated namely: -
• It states the list of deficiencies observed during the review of gold loans in select SEs, it includes shortcomings in the use of third parties for sourcing and appraisal of loans, valuation of gold without the presence of the customer, inadequate due diligence, and lack of end-use monitoring of gold loans, lack of transparency during the auction of gold ornaments and jewellery on default by the customer, weaknesses in the monitoring of LTV, and incorrect application of risk-weights, etc.
• All SEs are advised to thoroughly review and enhance their gold loan policies and practices to address identified gaps, monitor their gold loan portfolios closely due to recent growth, and ensure adequate controls over outsourced activities and third-party service providers.
• It mentions that action taken shall be reported to the Senior Supervisory Manager of the Reserve Bank within three months.
[Notification no. - RBI/2024-25/77]
