Mumbai: The Reserve Bank of India has asked banks to share with it information about frauds reported in gold loans, actions taken by them to recover the money and defaults in the portfolio, people with knowledge of the matter said.
The RBI has also asked banks to review their lending processes to check if they comply with the regulator’s gold lending guidelines. The RBI sought this information after it found that employees of two state-owned banks had manipulated their system to meet gold loan targets, they said.
“The RBI can access information on the Central Large Credit Information Repository (Crilc) for loans above ₹ 5 crore and Credit Information Bureau India (Cibil) for small bill loans,” said a senior bank official. “However, it sought information from banks to understand the nature of frauds that are not caught under Crilc and Cibil, and to sensitize lenders,” he added.
The RBI did not respond to ET’s request for comment.
“The regulator initially received a whistle-blowing complaint that said employees of some banks were conniving with friendly customers and giving them collateral-free gold loans. Later, the money was credited back to the bank as repayment, creating a lien against it,” another banker said. aware of the whistler’s complaint.
Further, the complainant said the branch paid the processing fee from his expense account, while interest payment was avoided by manipulating the system to backdate repayments.
The RBI sent the letter to banks around the time it barred IIFL Finance (March 4) from giving new gold loans.
Gold loans comprised one-third of IIFL Finance’s assets under management.
Similarly, the finance ministry has ordered state-owned banks to review gold loan processes amid concerns that lenders are indulging in evergreen loans, as first reported by ET on March 9. It has asked banks to review every gold loan account from January 1, 2022, assess the additional value and analyze collection costs.
The concern comes amid a 17% increase in gold loans year-on-year and a 16.6% increase in the prices of the yellow metal. Loans against gold jewelery totaled Rs 1,01,934 crore as on 26 January. Gold prices touched an all-time high of Rs 65,140 per 10 grams on March 5.