Worried over a spurt in gold imports, the Reserve Bank of India, on Friday, asked banks to reduce exposure to non-banking finance companies (NBFCs), which give loan against the precious metal, at the earliest and bring it under the prescribed limit within six months.
“Banks which are now having exposures to such NBFC's (giving gold loans) in excess of the...regulatory ceiling will be required to reduce their exposure...at the earliest but not later than six months,” the RBI said in circular.
Banks, according to the circular, are required to bring down their exposure ceiling to such NBFCs from 10 per cent to 7.5 per cent of its capital funds. The ceiling will apply to those NBFCs which are predominantly engaged in lending against gold and have provided such loans to the extent of 50 per cent or more of its total advances.
