The Reserve Bank of India (RBI) announced a relaxation on Thursday in the gold loan guidelines. Now banks will be able to give more loans in lieu of jewelry. Briefing the key decisions taken at the Central Bank's Monetary Policy Committee (MPC) meeting, RBI Governor Shaktikanta Das said that in the context of gold loan, the new guidelines can get loans up to 90% of the value of gold. According to earlier guidelines, a loan amounting to 75% of the gold price could be received. In this era of coronavirus epidemic, gold-related loans are becoming more popular as they are considered safer than any other loan.
Das said on Thursday that RBI is projected to shrink the country's GDP in the current financial year as the epidemic has affected economic activity worldwide. This has led to the apprehension of all manner of debt payments. According to a news agency PTI report, gold finance company Muthoot Finance is expected to increase its gold loan business by 15-20% in the current financial year. The company's managing director George Alexandre Muthoot said that the coronavirus is not expected to affect the gold portfolio. "Gold loan is a short-term loan. It is suitable to meet the requirement of working capital. Small businesses want to resume their business so they are coming to us for gold loans.''
He said that his company has recently launched the facility of Loan@Home in view of the coronavirus pandemic. It may be noted that apart from the finance companies offering gold loans in the country, many public and private banks have also offered a number of promotional offers on gold loans to attract customers.
Image credit: businesstoday