New gold standard

.....The gold loans are also usually of small ticket sizes made for periods of six months to a year. That – apart from the inherent value of the collateral itself – makes them less risky vis-à-vis lending to power projects or even home loans of 15-20 years' tenure. Moreover, it is not clear how exactly the RBI has arrived at 60 per cent loan-to-value ratio as a safe outer limit for NBFCs, even while not mandating it in respect of gold advances by commercial banks. This, despite the likes of Muthoot and Manappuram Finance having far less proportion of bad loans on their books compared with regular banks. ........

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