Gold loan non-banking finance companies (NBFCs) do not see the Reserve Bank of India’s latest directive on financing for gold purchases impacting their businesses.
The RBI on Monday clarified that no advances should be granted by NBFCs for purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold exchange traded funds and units of gold mutual funds.
Reacting to the bank’s circular, the Association of Gold Loan Companies (AGLOC) said gold loan NBFCs lend against jewellery of households only.
Therefore, the move to forbid NBFCs from lending against gold coins, bullion, primary gold would have no impact on gold loan NBFCs, George Alexander Muthoot, President, AGLOC, said in a statement.
Gold loan companies had not been providing any advances against gold coins, bullions or gold bars, the statement noted.
AGLOC, however, rued that it does not have a level-playing field with banks as regards lending against gold coins weighing up to 50 gram per customer.