RBI bans loans against gold ETF units

The Reserve Bank of India (RBI) on Monday said banks would not be allowed to give loans against units of gold exchange-traded funds (ETFs) and gold mutual funds.

Written by ENS Economic Bureau | Mumbai | Published:May 28, 2013 3:43 am

The Reserve Bank of India (RBI) on Monday said banks would not be allowed to give loans against units of gold exchange-traded funds (ETFs) and gold mutual funds.

The RBI also said no advances should be given by non-bank financial companies (NBFCs) against bullion,primary gold and gold coins.

As gold ETFs and MFs are backed by bullion and primary gold,the restriction on grant of loan against gold bullion will be applicable to loan against units of gold ETFs and units of gold mutual funds,the RBI said in a notification.

The central bank also said that while giving loan against gold coins sold by banks,the lenders should ensure that the weight of the coins does not exceed 50 grams per customer.

“The amount of loan to any customer against gold ornaments,gold jewellery and gold coins (weighing up to 50 grams) should be within the board approved limit,” the RBI notification said.

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