{"id":14495,"date":"2020-08-12T20:19:17","date_gmt":"2020-08-12T20:19:17","guid":{"rendered":"https:\/\/bengalnewstimes.com\/?p=14495"},"modified":"2020-08-12T20:19:17","modified_gmt":"2020-08-12T20:19:17","slug":"banks-to-be-cautious-despite-gold-loan-ltv-relaxation-report","status":"publish","type":"post","link":"https:\/\/bengalnewstimes.com\/?p=14495","title":{"rendered":"Banks to be cautious despite gold loan LTV relaxation: Report"},"content":{"rendered":"<p><\/p>\n<div>\n<div class=\"article-image\">\n<figure><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden wp-image-2018012 size-large\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/07\/1-240-620x413.jpg\" alt=\"\" width=\"620\" height=\"413\" srcset=\"\" sizes=\"auto, (max-width: 620px) 100vw, 620px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden wp-image-2018012 size-large\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/07\/1-240-620x413.jpg\" alt=\"\" width=\"620\" height=\"413\" srcset=\"\" sizes=\"auto, (max-width: 620px) 100vw, 620px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-2018012 size-large\" src=\"https:\/\/images.financialexpress.com\/2020\/07\/1-240-620x413.jpg\" alt=\"\" width=\"620\" height=\"413\" srcset=\"https:\/\/images.financialexpress.com\/2020\/07\/1-240-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2020\/07\/1-240-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2020\/07\/1-240-401x267.jpg 401w, https:\/\/images.financialexpress.com\/2020\/07\/1-240-440x293.jpg 440w, https:\/\/images.financialexpress.com\/2020\/07\/1-240-80x54.jpg 80w, https:\/\/images.financialexpress.com\/2020\/07\/1-240-313x209.jpg 313w, https:\/\/images.financialexpress.com\/2020\/07\/1-240.jpg 660w\" sizes=\"auto, (max-width: 620px) 100vw, 620px\"\/><\/noscript><\/noscript><span class=\"article-caption\">The increase on LTV ratio on gold loans is for banks and will be applicable up to March 31, 2021.<\/span><\/figure>\n<\/div>\n<p>Despite relaxation in loan-to-value (LTV) ratio on gold loans, banks are likely to be cautious in lending and will keep a buffer for any correction in the price of collaterals, says a report.\u00a0 Last week, the Reserve Bank of India (<a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/tag\/rbi\/\" rel=\"noopener noreferrer\">RBI<\/a>) had increased the permissible LTV ratio for loans against pledge of gold ornaments and jewellery for non-agricultural purposes from 75 per cent to 90 per cent.<\/p>\n<p>The increase on LTV ratio on gold loans is for banks and will be applicable up to March 31, 2021.<\/p>\n<p>\u201cWe believe gold loan non-banking finance companies are unlikely to be significantly impacted by RBI\u2019s new guidelines allowing banks to lend up to 90 per cent of the gold value, as prudent lending practices may demand lenders to be cautious and keep a cushion to provide for any material correction in the price of collaterals,\u201d India Ratings and Research said in its note.<\/p>\n<p>While there remains a fair bit of competition among banks, gold loan non-banking financial companies (NBFCs) and moneylenders, they all also have their own niche and hence attract different customer segments, it added.\u00a0 The agency believes lending cautiously for banks is especially important in the light of the recent rapid rise in gold prices (39 per cent over April 1 \u2013 August 11, 2020), which increases the probability of pullback.<\/p>\n<p>It said as the credit risk in gold loans is highly correlated to the collateral value, any material correction trend in gold prices could increase credit costs as well as the auction risk.\u00a0Also, topping up with additional collateral in between the tenor remains a challenge for the borrower profile that avails gold loans.<\/p>\n<p>\u201cHence, prudence during rising gold prices will demand cautious LTVs and shorter tenor exposures to hedge the risk,\u201d the agency said.<\/p>\n<div class=\"common-bottom-text\">\n<p>Get live <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">Stock Prices<\/a> from <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/s-p-bse-sensex-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">BSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nifty-50-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">NSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/investing-abroad\/\" target=\"_blank\" rel=\"noopener noreferrer\">US Market<\/a> and latest NAV, portfolio of <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Mutual Funds<\/a>, calculate your tax by <a href=\"https:\/\/www.financialexpress.com\/income-tax-calculator\/\" target=\"_blank\" 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Like us on <a href=\"https:\/\/www.facebook.com\/thefinancialexpress\" target=\"_blank\" rel=\"noopener noreferrer\">Facebook<\/a> and follow us on <a href=\"https:\/\/twitter.com\/FinancialXpress\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a>.<\/p>\n<p class=\"telegram-text\"><img loading=\"lazy\" decoding=\"async\" class=\"telegrma_img\" src=\"https:\/\/images.financialexpress.com\/2020\/04\/telegram.png\" alt=\"\" width=\"24\" height=\"24\" style=\"margin: 0px 5px 4px 0px; float: left;\"\/>Financial Express is now on Telegram. <a href=\"https:\/\/t.me\/TheFinancialExpressOnline\" target=\"_blank\" rel=\"noopener noreferrer\">Click here to join our channel<\/a> and stay updated with the latest Biz news and updates.<\/p>\n<\/div>\n<\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/><a href=\\\"https:\/\/www.financialexpress.com\/industry\/banking-finance\/banks-to-be-cautious-despite-gold-loan-ltv-relaxation-report\/2053386\/\\\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The increase on LTV ratio on gold loans is for banks and will be applicable up to March 31, 2021. Despite relaxation in loan-to-value (LTV) ratio on gold loans, banks are likely to be cautious in lending and will keep a buffer for any correction in the price of collaterals, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":12831,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"spay_email":"","footnotes":""},"categories":[36],"tags":[],"class_list":["post-14495","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-business"],"jetpack_featured_media_url":"https:\/\/bengalnewstimes.com\/wp-content\/uploads\/2020\/08\/1-240.jpg","_links":{"self":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/14495","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14495"}],"version-history":[{"count":0,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/14495\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/media\/12831"}],"wp:attachment":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14495"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14495"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14495"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}