Gold loan rbi recommendation

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Gold loan rbi recommendation

  1. 1. Gold loan - RBI recommendation www.muthootfincorp.com
  2. 2. <ul><li>NBFC’s that have its core business in gold loans are the fasted growing financial services business in India. </li></ul>
  3. 3. <ul><li>In a recent recommendation, the working group appointed by the Reserve Bank of India raised the tier 1 capital reserve requirement for NBFC. </li></ul>
  4. 4. <ul><li>Even though the move has not been welcomed by smaller Non Banking Finance Companies, the Larger Gold Loan NBFC’s are happy that they are now viewed on par with banks. </li></ul>
  5. 5. <ul><li>Large gold loan companies like Muthoot Fincorp with a gold loan portfolio of more than 160 crores have welcomed the move. </li></ul>
  6. 6. <ul><li>The RBI working group recommends a Tier 1 capital reserve of 12 per cent applicable to the assets of NBFC’s also, which highlights the importance of gold loan companies in financing sensitive sectors. </li></ul>
  7. 7. <ul><li>Such measures help gold loan companies and banks to address systemic risks. </li></ul>
  8. 8. <ul><li>Previously, for gold loan with a ticket size below Rs 1,00,000 banks are required to apply a risk weight of 50 per cent while NBFC’s a risk weight of 100 per cent of the entire gold loan portfolio. </li></ul>
  9. 9. <ul><li>The new recommendations have lowered the risk weight hence freeing up more of the capital and placing gold loan NBFC’s on par with banks. </li></ul>
  10. 10. Contact Us <ul><li>www.muthootfincorp.com </li></ul>

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