You can now borrow up to 15 per cent more loans on gold jewellery. Reserve Bank of India (RBI) Governor Shaktikanta Das, on Thursday, announced a relaxation on loan-to-value (LTV) ratio for gold loans from the current 75 per cent to 90 per cent.
For example, if the value of your gold is Rs 1 lakh you can now get a loan of up to a maximum of Rs 90,000 from earlier Rs 75,000.
Announcing the decision taken by RBI's Monetary Policy Committee (MPC), Das said that loans against gold have been enhanced to mitigate the impact of COVID-19 on households. He enunciated that "with a view to mitigating the impact of COVID-19 on households, it has been decided to increase the permissible loan to value ratio (LTV) for such loans to 90 per cent." He added that this relaxation shall be available until March 31, 2021.
The LTV ratio refers to the amount of a loan a borrower can get against gold as collateral.
Continuing its upward trajectory, gold prices breached the 55,000-mark on Wednesday as international prices touched a record high. In the national capital, gold prices jumped Rs 1,365 to Rs 56,181 per 10 grams.
Meanwhile, in an important step, the RBI decided to leave the repo and reverse repo rates unchanged during its bi-monthly monetary policy address. Thus, the repo rate continues to be at 4 per cent while the reverse repo rate remains unchanged at 3.3 per cent, Shaktikanta Das said at a virtual press conference.
The central bank on Thursday opted for a status quo and left interest rates unchanged, but maintained an accommodative stance, implying more rate cuts in future if the need arises to support the economy hit by the COVID-19 crisis.
He said the MPC voted for keeping the interest rate unchanged and continued with its accommodative stance to support growth.
RBI had last revised its policy rate on May 22, in an off-policy cycle to perk up demand by cutting interest rates to historic low.