Banking and monetary regulator, Reserve Bank of India has announced more stringent lending norms for companies in the gold loan business.
The gold loan business is predominantly handled by non banking finance companies (NBFCs) in India.
Following the new directive from the apex bank, gold loan business may face some growth laggard, said the head of a big gold loan player.
The margins of 9-10% which these firms had been maintaining since the past few years may now see a dip by as much as 100 bps, they apprehend.
According to Mr George Alexander Muthoot, Managing Director, Muthoot Finance, the step taken by RBI may hinder new players from entering into this segment in loan business.