InvestorQ : Do you see the Indian banks and gold finance companies picking up the higher LTV bait?
rhea Babu made post

Do you see the Indian banks and gold finance companies picking up the higher LTV bait?

Answer
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1 month ago


While the RBI has made its move, it remains to be seen if the gold finance companies and banks will pick up the bait. A recent report put out by India Ratings and Research pointed that most banks and financers may not be too keen to use this additional leeway.

This aversion to lose the higher limit may be largely due to the risks involved. In most of the cases, the banks and gold financiers may desist due to own internal risk management.

This problem gets more pronounced in the light of the recent 40% rally in gold between April and August. Banks are expected to hedge this risk with cautious LTV levels or they may only offer shorter tenure gold loans in case of higher LTV.