Banks to be cautious in lending despite gold loan LTV relaxation: Report

Last week, the Reserve Bank of India 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

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.

Last week, the Reserve Bank of India (RBI) 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.

The increase on LTV ratio on gold loans is for banks and will be applicable up to March 31, 2021.

"We believe gold loan non-banking finance companies are unlikely to be significantly impacted