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    Dec 2009


    Default RBI tightens norms for bank lending to gold finance cos

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    Concerned over spurt in gold imports, RBI today asked banks to reduce exposure to NBFCs giving loan against the precious metal and has set up a working group to suggest ways to deal with the issue.

    The Reserve Bank, in Annual Monetary Policy Statement, has also asked banks to set up internal exposure limits for those non-banking financial companies (NBFCs) who have gold ***** portfolio of more than 50 per cent of the total financial assets.

    "Banks should reduce their regulatory exposure ceiling in a single NBFC, having gold ***** to the extent of 50 per cent or more of its total financial assets, from the existing 10 per cent to 7.5 per cent of bank's capital funds," RBI Governor D Subbarao said.

    He further said that banks should have an internal sub- limit on their aggregate exposure to all such NBFCs.

    The Working Group, headed by K U B Rao (a senior RBI official), will conduct a detailed study of the issues connected with rising gold import and *****. The group will submit its report by July-end.
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