RBI enhances gold loan-to-value ratio to 90%

This is applicable only till March 31, 2021.

August 06, 2020 03:47 pm | Updated 03:54 pm IST - MUMBAI

File photo used for representational purpose.

File photo used for representational purpose.

With a view to further mitigate the economic impact of the COVID-19 pandemic on households, entrepreneurs and small businesses, the RBI has been decided to increase the permissible loan to value ratio (LTV) for loans against pledge of gold ornaments and jewellery for non-agricultural purposes to 90%.

Under the current guidelines, loans sanctioned by banks against pledge of gold ornaments and jewellery should not exceed 75% of the value of gold ornaments and jewellery which has now increased to 90%, the RBI said in a circular.

“This enhanced LTV ratio will be applicable up to March 31, 2021 to enable the borrowers to tide over their temporary liquidity mismatches on account of COVID 19,” the circular said.

Accordingly, fresh gold loans sanctioned on and after April 1, 2021 shall attract LTV ratio of 75%, it added.

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