MUMBAI: Rating agency
Crisil
has said that companies lending against gold have not been significantly impacted either by RBI’s directive asking companies them to avoid cash or by the decline in
gold prices
.
In May 2024, RBI advised
NBFCs
to comply with the Income Tax Act, limiting
cash disbursements
to Rs 20,000, with larger amounts requiring digital channels like NEFT, RTGS, or UPI.
Following the circular, Crisil had forecast a slowdown in loans, as NBFCs previously disbursed up to 95% of gold loans in cash for quicker service.
“Early evidence of growth momentum is seen in disbursements for June 2024, which were 12% higher than the average monthly disbursements in the preceding quarter. Excluding one large player, the growth was even higher at 23%,” said Ajit Velonie, senior director, Crisil Ratings
According to Crisil, this growth has been supported by operational resilience, adaptability to regulations, and favourable gold prices. “Declining gold prices (after the Budget cut customs duty) have not affected gold-loan NBFCs materially for two reasons. One, we estimate the portfolio loan-to-value (LTV) range for these NBFCs at 60-65% as on June 30, 2024, which provides adequate cushion to manage unfavourable movement in gold prices,” said Malvika Bhotika, director, Crisil Ratings.
According to Crisil, NBFCs must closely monitor loan-to-value ratios.
