RBI move to slow down gold loan growth, lead to uptick in default: CRISIL

The Reserve Bank's recent notification asking financiers to review their gold loan practices can slow down loan growth in the near-term and lead to an uptick in asset quality stress, a domestic rating agency said on Tuesday. "Potentially, this could impact gold loan disbursements during the transition phase and curb growth in the business," the note by Crisil said. It can be noted that a few weeks ago, RBI had flagged certain irregular practices in loan against gold jewellery and asked lenders to comprehensively review their policies, processes and practices to identify gaps and initiate remedial measures in a time-bound manner. The notification had flagged deficiencies in the monitoring of the loan-to-value (LTV) ratio, asset classification norms for overdue loan accounts, and inadequate due-diligence in monitoring the end-use of gold loans. Reported loan delinquencies may see some uptick as entities revisit their current non-performing asset (NPA) recognition norms and/or policie

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