Sharp rise in gold loan defaults of banks, NPA increased by 21 percent!
The NPA of gold loans of banks and NBFCs has increased. Finance minister Nirmala Sitharaman said that apart from scheduled commercial banks, gold loans of upper and middle-layer NBFCs which have now become Gross Non-Performing Assets (GNPAs) have seen a jump of 18.14 percent between march 2024 and june 2024. During the same period, only the gold loans of banks which have become NPAs have seen a jump of 21.03 percent. Till june 30, 2024, the share of gold loans in the total loans of banks which have become NPAs is 0.22 percent, while the share of gold loans of upper layer and middle layer NBFCs is 2.58 percent.
The Finance minister, in his written reply during the Question Hour in the Lok Sabha, said that under the RBI guidelines, several steps have been taken to reduce the risks associated with gold loans as well as to ensure correct valuation of gold pledged. This includes assessment and reassessment of gold deposited as pledge at regular intervals in different ways, in which the purity of gold is checked in different ways like acid test, touchstone test, X-ray.
The Finance minister said that creating a panel of trained and skilled appraisers to assess the value of pledged gold, valuation of gold pledged by the borrower is done under CCTV surveillance in the presence of branch officials and the borrower. Apart from this, gold loan has been given under the guidelines and internal policy of the regulator to ensure that audits are done at certain intervals. Also, if the customer fails to repay the gold loan, then the pledged gold is auctioned. In this, it is ensured that the customers are informed about it in advance and they are given enough time to repay the loan.
The Finance minister said that several steps have been taken by the government and the reserve bank of india to reduce the risk of NPA in gold loans. In which the Department of Financial services has advised the government banks on 27 february 2024 that along with a comprehensive review of the gold loans given between 1 january 2022 and 31 january 2024, they will check the gold kept in pledge, review the interest rates and review other charges levied on the borrower.
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