This refers to the RBI's directions to gold loan companies capping the loan-to-value ratio (LTV) for lending against gold at 60 per cent. The directions will not put the gold loan companies on a level playing ground with the commercial banks, in respect of which the RBI has not issued any directions for downsizing LTV, and whose cost of funds is much cheaper. While the imperative to contain concentration risk is understandable, it would be in the best interests of the sector if the RBI brought in standard LTV for all gold lenders, including commercial banks.
- Vijay Nair Trivandrum (HBL)
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