The Reserve Bank of India on 6th August 2020 has raised the permissible loan to value (LTV) ratio for gold loans for non-agricultural purposes from 75% to 90% due to COVID-19 pandemic.
RBI in its earlier circular dated 16th February 2020 has issued guidelines directing the banks to sanction loans against pledge of gold ornaments and jewelry which shall not exceed 75 per cent of the value of gold ornaments and jewelry. However, in order to mitigate the economic impact of the Covid19 pandemic on households, entrepreneurs and small businesses, it has been decided to increase the permissible loan to value ratio (LTV) for loans against pledge of gold ornaments and jewelry for non-agricultural purposes from 75 per cent to 90 per cent.
The enhanced LTV ratio will be applicable up to 31st March 2021 to enable the borrowers to tide over their temporary liquidity mismatches on account of COVID 19. Further fresh gold loans sanctioned on and after April 1, 2021, shall attract LTV ratio of 75 per cent.
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