.........That RBI has acted out of its responsibility to prevent critical risks from materialising is not in question. But what has fallen off the radar is a recognition of the potentially transformative impact of gold loans, particularly in monetising India’s vast stock of private gold, and in advancing financial inclusion (about 65 per cent of our gold is held by rural India). By restricting LTV to 60 per cent and selectively applying it to gold loan NBFCs, there’s the risk of stifling the original innovators in the business, and of needlessly reinvigorating the unorganised sector. Indeed, RBI would do well to keep an eye out for the flip side of it all, and not hesitate to recalibrate its policy responses when the evidence calls for it.
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