Reserve Bank of India (RBI) has come out with a notification on gold loan repayment. The RBI notification that came in on Wednesday evening says that gold (metal) loans can now be repaid in physical gold as well. This is being seen as a big breakthrough, especially in the industry and for the bullion as well.

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Until now, the banks, which were authorised to import gold or were participating in the gold monetisation scheme, were allowed to extend gold loans to jewellery manufacturers and jewellery exporters, and the repayment of these gold loans were been done via Indian rupee.

However, after this notification, the RBI says that banks can provide the option to the borrower to repay part of the gold (metal) loan in physical gold as well.

RBI goes on to say that the repayment can be done in lots of 1 kilogram or more, also repayment will have to be done in locally sourced India gold delivery standards or LBMA certified gold. Also, the gold delivery will have to be done to the bank, directly by the refiner or the central agency on behalf of the borrower. The borrower cannot be a part of this repayment that would be coming into the banks.

Watch the accompanying video of CNBC-TV18’s Manisha Gupta explaining what it entails.

(Edited by : Dipika)

First Published:Jun 24, 2021 1:20 PM IST