New Delhi: The Reserve Bank has asked NBFC companies not to disburse more than Rs 20,000 in cash on loan against gold in line with income tax laws.
In an advisory issued to gold loan financiers and microfinance institutions earlier this week, the Reserve Bank of India has advised them to comply with Section 269SS of the Income Tax Act.
Section 269SS of the Income Tax Act states that a person cannot accept deposits or loans made by any person other than through specified modes of payment. Under the section, the permissible cash limit is Rs 20,000.
The advisory comes weeks after the Reserve Bank barred IIFL Finance from sanctioning or disbursing gold loans after it observed some material supervisory concerns in its gold loan portfolio.During the inspection, the RBI found "serious deviations" in checking the authentication of gold used as collateral for loans and during auctions after the default.
Commenting on the advisory, VP Nandakumar, MD and CEO, Manappuram Finance, said that I have reiterated the limit of Rs 20,000 for giving cash loans.
“Our highly popular product – Online Gold Loan, which forms 50 per cent of your gold loan book, follows a completely paperless process of application and disbursement,” he said.
Even for loans availed from branches, most customers prefer direct transfer, he said.
Umesh Mohanan, CEO, Indel Money, said the recent RBI directive on ensuring seamless transition in bank transfers is aimed at increasing compliance in the NBFC sector.While this may bring transparency and better compliance, and is a step in the right direction towards the beginning of Digital India, it may have the effect of lack of adaptability in rural India, where many individuals are not part of the formal mainstream. Banking system, Mohanan said.
The directive may inadvertently exclude marginalized communities from access to gold loans for emergency situations, leading to increased financial exclusion, he said, adding that RBI's move to prioritize compliance can be appreciated. Is.
In an advisory issued to gold loan financiers and microfinance institutions earlier this week, the Reserve Bank of India has advised them to comply with Section 269SS of the Income Tax Act.
Section 269SS of the Income Tax Act states that a person cannot accept deposits or loans made by any person other than through specified modes of payment. Under the section, the permissible cash limit is Rs 20,000.
The advisory comes weeks after the Reserve Bank barred IIFL Finance from sanctioning or disbursing gold loans after it observed some material supervisory concerns in its gold loan portfolio.During the inspection, the RBI found "serious deviations" in checking the authentication of gold used as collateral for loans and during auctions after the default.
Commenting on the advisory, VP Nandakumar, MD and CEO, Manappuram Finance, said that I have reiterated the limit of Rs 20,000 for giving cash loans.
“Our highly popular product – Online Gold Loan, which forms 50 per cent of your gold loan book, follows a completely paperless process of application and disbursement,” he said.
Even for loans availed from branches, most customers prefer direct transfer, he said.
Umesh Mohanan, CEO, Indel Money, said the recent RBI directive on ensuring seamless transition in bank transfers is aimed at increasing compliance in the NBFC sector.While this may bring transparency and better compliance, and is a step in the right direction towards the beginning of Digital India, it may have the effect of lack of adaptability in rural India, where many individuals are not part of the formal mainstream. Banking system, Mohanan said.
The directive may inadvertently exclude marginalized communities from access to gold loans for emergency situations, leading to increased financial exclusion, he said, adding that RBI's move to prioritize compliance can be appreciated. Is.
