The Reserve Bank today allowed Non-Banking Financial Companies (NBFCs) to use gold price at commodity exchange to determine the value of the metal for purpose of advancing loans against it.
"...NBFCs may also use the historical spot gold price data publicly disseminated by a commodity exchange regulated by the Forward Markets Commission.
Currently, the valuation of gold jewellery for arriving at the Loan-To-Value (LTV) is be done at the average of the closing price of 22 carat gold for the preceding 30 days as quoted by the Bombay Bullion Association (BBA).
NBFCs lend up to 75 per cent of the value of gold to customers.
