The Reserve Bank of India said loans sanctioned by Regional Rural Banks and State/Central Co-operative Banks for the purpose of medical expenses and meeting unforeseen liabilities should not exceed 75 per cent of the value of gold ornaments and jewellery.
Further, in order to standardise the valuation and make it more transparent to the borrower, the RBI said gold jewellery accepted as security/collateral will have to be valued at the average of the closing price of 22 carat gold for the preceding 30 days as quoted by the India Bullion and Jewellers Association Ltd.
If the gold is of purity less than 22 carats, the bank should translate the collateral into 22 carat and value the exact grams of the collateral. In other words, jewellery of lower purity of gold shall be valued proportionately.