LENDING
AGAINST GOLD
Notification No – RBI/2012-13/541
Dated: – 25th June 2013
Please refer to paragraph 98 of the Monetary Policy Statement
2013-14 announced on May 3, 2013 on lending against gold, proposing to restrict
the facility of advances against the security of gold coins per customer to
gold coins weighing up to 50 gms.
As per extant instructions contained in our circular
DBOD.Leg.BC.95/C.124 (P) - 78 dated July 22, 1978, RRBs should not grant any advance against gold bullion.
RRBs are, however, currently permitted to grant advances against
gold ornaments and jewellery subject to Board approved policies in terms of our
circular DBOD.No.BC.138/21.01.023/94 dated November 22, 1994.
Advances may also be granted against specially minted gold coins
sold by banks which may not be in the nature of “bullion” or “primary gold”.
However, as pointed out in the monetary policy statement, there is
a risk that some of these coins would be weighing much more, thereby
circumventing the Reserve Bank’s guidelines regarding restriction on grant of
advance against gold bullion. Accordingly, it is advised that while granting
advance against the security of specially minted gold coins sold by banks, RRBs
should ensure that the weight of the coin(s)
does not exceed 50 grams per customer and the amount of loan to any
customer against gold ornaments, gold jewellery and gold coins (weighing up to
50 grams) should be within the Board approved limit.
Advance against units of gold Exchange Traded Funds (ETF) and gold
Mutual Funds is not permitted. As these products are backed by
bullion/primary gold, it is clarified that the restriction on grant of loan
against “gold bullion” stipulated in terms of our circular dated July 22, 1978
referred to at para 2 above, will also be applicable to grant of advance
against units of gold ETFs and units of gold Mutual Funds.
Regards
CA. Mona Singhal
Partner
Arpit Gupta & Associates
Chartered Accountants
701, Nirmal Tower,
26, Barakhamba Road,
Connaught Place, Delhi-110001
Mobile:- +91-9873082769
Website: www.caaga.co.in
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