Lending against Gold - RBI Clarifies
AS per existing instructions, banks should not grant any advance against gold bullion. Monetary Policy Statement 2013-14 announced on May 3, 2013, proposed to restrict the facility of advances against the security of gold coins per customer to gold coins weighing up to 50 gms. Banks are currently permitted to grant advances against gold ornaments and jewellery subject to Board approved policies in terms of RBI circular dated November 22, 1994. Since specially minted gold coins sold by banks may not be in the nature of "bullion" or "primary gold", it was indicated in the clarification dated April 5, 2011 that there would be no objection to the bank granting loans against these coins.
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 them, banks 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.
RBI has also clarified the doubt whether advance against units of gold Exchange Traded Funds (ETF) and gold Mutual Funds is permitted.