Banks have been barred from disbursing loans against gold coins weighing more than 50 gram. The announcement was made by the Reserve Bank of India (RBI) in its monetary policy 2013-14 released in the first week of May 2013.
"While there may not be any objection to grant of advances against specially minted gold coins sold by banks, there is risk that some of these coins would be weighing much more, thereby circumventing the guidelines regarding restrictions on grant of advance against gold bullion," the RBI said.
Banks are allowed to offer loan against gold ornaments and other jewellery and specially-minted gold coins sold by banks. However, they cannot lend for purchase of gold in any form.
Banking analysts say that banks have been giving gold loans in the small-ticket category against jewellery. So, the 50 gram limit will not be a hindrance.
"The move is aimed at restricting borrowing from banks to fund speculative investments in gold. So, the business of disbursing loans against jewellery is not likely to be affected," says Vaibhav Agrawal, vice president, research, banking, Angel Broking.
The RBI will issue detailed guidelines on loans against gold coins by the end of May 2013.