India's new gold loan regulations to reshape lending landscape: S&P Global
New Delhi [India], June 19 (ANI): S&P Global Ratings anticipates that the new regulations in Gold-Backed Loans will necessitate business model adjustments for lenders, with nimble players likely to gain a competitive edge.India's booming gold-backed loan sector is poised for significant changes with the introduction of new regulations, expected to be fully implemented by April 1, 2026.A key change involves the inclusion of interest payments until maturity in the calculation of Loan-to-Value (LTV) ratios, which could reduce the initial loan amount disbursed to borrowers. Additionally, credit appraisals for consumption-focused loans exceeding USD 3,000 and all income-generating loans will now require a cash flow analysis of borrowers, a departure from the traditional reliance on collateral valuation.The new rules also aim to enhance customer protection by standardizing the regulatory framework and addressing prudential and conduct gaps. This includes clearer guidelines on collateral handling and auction processes, mandating the return of pledged collateral and auction surpluses to borrowers within seven working days.Disbursements above INR 20,000 (approximately USD 231) will now be made directly to borrowers' bank accounts. The RBI is also emphasizing greater transparency in interest rate and fee disclosures and scrutinizing the outsourcing of core financial services.This shift will particularly impact nonbank financial companies (NBFCs) with large gold loan portfolios, such as Muthoot Finance Ltd. and Manappuram Finance Ltd., as they will need to invest in developing new risk management policies and training loan officers.Despite these adjustments, operational agility and service excellence, including quick and seamless loan disbursement, will remain crucial differentiators for lenders. NBFCs' strong customer relationships and investments in analytics are expected to help them maintain competitiveness.While these new models offer opportunities, they also introduce risks, particularly the heightened sensitivity to sharp corrections in gold prices if higher LTV norms are adopted for income-producing loans. Gold prices have surged by nearly 80% since late 2023, leading to a significant increase in collateral value and loan books. The RBI's regulatory treatment of NBFC gold loans, which applies a 100% risk weight, helps mitigate price risk, although banks currently benefit from a 0% risk weight on these loans. (ANI)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
an hour ago
- Time of India
RBI eases norms for loans to projects like roads and ports
MUMBAI: RBI has eased regulations for project financing, which will make it less expensive for lenders to provide loans for infrastructure and industrial projects like roads, ports and power plants. The move acknowledges varying risk levels across sectors. The regulator has finalised its project finance guidelines, effective Oct 1, 2025, offering more flexible and sector-specific norms. Key changes include reduced general provisions for under-construction and operational projects. Penalties for project delays have also been eased. In the earlier draft, a delay beyond two years (infrastructure) or one year (non-infrastructure) attracted a 2.5% provision. Now, it's reduced to about 0.4% and 0.6% per quarter of delay, respectively. Projects financially closed before Oct 1, 2025, are exempt - unless there's a credit event or major loan restructuring. Instead of a flat 5% provision, commercial real estate (CRE) projects need 1.25% during construction and 1% when operational; CRE-residential housing requires 1% and 0.75%, while others need 1% and 0.4%. The definition of credit events is now clearer, excluding vague clauses like "NPV (net present value) diminution." by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Giao dịch CFD với công nghệ và tốc độ tốt hơn IC Markets Đăng ký Undo It focuses on tangible signs like default, DCCO (date of commencement of commercial operations) extension, or financial stress. RBI has also simplified delay categorisation: Infrastructure projects can defer DCCO by up to three years; non-infra, including CRE and CRE-residential housing, by two. Also, financial closure means 90% of funding is legally committed, with regulatory approvals tied to milestones instead of closure date - offering more realistic compliance. The overall framework is more practical, aiding developers and lenders alike. The earlier draft norms were announced by then RBI governor Shaktikanta Das. His successor, Sanjay Malhotra, had announced that the norms would not enforced in FY25. Commercial banks with substantial project finance portfolios would have faced a sharp rise in provisioning requirements, directly impacting their capital adequacy and profitability had RBI stuck to the earlier provisioning norms. Power Finance Corporation (PFC) and Rural Electrification Corporation (REC), which together hold more than Rs 16 lakh crore in project loans, were highlighted as among the most exposed to these draft norms Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
India Gazette
an hour ago
- India Gazette
Air India to reduce flights on international routes, suspend operations to three cities till July 15
New Delhi [India], June 20 (ANI): Air India said on Thursday that it will reduce flights on various internationa routes per week and temporarily suspend operations on three routes from June 21 to July 15, 2025. This comes nearly a week after the June 12 AI-17 plane crash, involving a Boeing 787 in Gujarat's Ahmedabad. 'Further to the press statement released yesterday, 18 June 2025, which announced a temporary reduction in services operated by Boeing 787 and 777 aircraft, we wish to provide details on the flights affected. These reductions will be effective from 21 June 2025, and last until at least 15 July 2025,' the airline said in a post on X. 'The reductions arise from the decision to voluntarily undertake enhanced pre-flight safety checks, as well as accommodate additional flight durations arising from airspace closures in the Middle East. The objective is to restore schedule stability and minimise last-minute inconvenience to passengers,' it said. It further said, 'Details of the flights affected are as follows: 1. Routes suspended until 15 July 2025:- Delhi-Nairobi (AI961/962) - 4x weekly flights*- Amritsar-London (Gatwick) (AI169/170) - 3x weekly flights- Goa (Mopa)-London (Gatwick) (AI145/146) - 3x weekly flights. ' '2. Routes with reduced frequency until 15 July 2025: North America- Delhi-Toronto: Reduced from 13x weekly to 7x weekly- Delhi-Vancouver: Reduced from 7x weekly to 5x weekly- Delhi-San Francisco: Reduced from 10x weekly to 7x weekly- Delhi-Chicago: Reduced from 7x weekly to 3x weekly- Delhi-Washington (Dulles): Reduced from 5x weekly to 3x weekly,' the airline said. 'Europe- Delhi-London (Heathrow): Reduced from 24x weekly to 22x weekly- Bengaluru-London (Heathrow): Reduced from 7x weekly to 6x weekly- Amritsar-Birmingham and Delhi-Birmingham: Reduced from 3x weekly to 2x weekly- Delhi-Paris: Reduced from 14x weekly to 12x weekly- Delhi-Milan: Reduced from 7x weekly to 4x weekly- Delhi-Copenhagen: Reduced from 5x weekly to 3x weekly- Delhi-Vienna: Reduced from 4x weekly to 3x weekly- Delhi-Amsterdam: Reduced from 7x weekly to 5x weekly,' it said, adding that Australia - Delhi-Melbourne and Delhi-Sydney: Reduced from 7x weekly to 5x weekly. 'Far East- Delhi-Tokyo (Haneda): Reduced from 7x weekly to 6x weekly- Delhi-Seoul (Incheon): Reduced from 5x weekly to 4x weekly**' it added. The airline said, '*Suspended until 30 June.**To operate 3x weekly from 21 June to 5 July, and 4x weekly from 6 July to 15 July.' 'Air India apologises to the passengers affected by these curtailments, and is proactively contacting affected passengers to offer re-accommodation on alternative flights, complimentary rescheduling or full refunds as per their preference,' it added. On June 12, the London-bound Air India Boeing 787-8 Dreamliner crashed into a hostel complex of BJ Medical College in the Meghani Nagar area of Gujarat's Ahmedabad shortly after takeoff from Sardar Vallabhbhai Patel International Airport. The tragedy claimed 241 lives out of 242 onboard, including former Gujarat Chief Minister Vijay Rupani. (ANI)
India Gazette
an hour ago
- India Gazette
PM Modi to flag off first 'made in India' locomotive for export to Guinea from Marhowra plant in Bihar
New Delhi [India], June 20 (ANI): Furthering the vision of 'Make in India - Make for the World,' Prime Minister Narendra Modi will flag off a state-of-the-art locomotive built at the Marhowra Plant in Bihar's Saran for export to the Republic of Guinea on Friday, a release said. According to the Prime Minister's Office (PMO) release, this is the first export locomotive manufactured in this factory. The release said the locomotives are equipped with high-horsepower engines, an advanced AC propulsion system, microprocessor-based control systems, ergonomic cab designs, and incorporate technologies like regenerative braking. Speaking to ANI, Dilip Kumar, Executive Director of Information and Publicity (EDIP) at the Railway Board, said the plant earlier produced locomotives exclusively for Indian Railways, but with increased capacity, India is now entering the global locomotive export market. 'Marhowrah Diesel Locomotive Plant is a dream project of the Indian Railway. Locomotives manufactured here were earlier being supplied within the Indian railways, and now with increased production, we have decided to export locomotives. We have received a big order from the Republic of Guinea, which requires standard gauge locomotives... 150 locomotives will be sent to the Republic of Guinea over the next three years for their iron ore mine,' he said. He added that standard gauge locomotives are in high demand globally, especially in Western Europe, Africa, and Australia, and the plant has been upgraded to produce both standard and broad gauge variants. 'We have modified this plant to manufacture standard gauge locomotives with broad gauge locomotives... Standard gauge locomotives are in high demand in countries of Western Europe, Africa, and Australia... Directly and indirectly, 2000-2500 people have been employed here,' he said. Sandeep, Managing Director of Wabtec India, said the locomotives are crucial for Guinea's Simandou Project, one of the world's largest iron ore mining ventures. 'The iron ore will be shipped to a port 620 km away, which will be done via rail, and the iron ore will then be exported to various countries. These locomotives are an important rolling stock that will drive trains 24/7, and we hope that it is a successful project...' he said. He noted that the project was awarded in 2015, with Wabtec holding a 75% equity stake and Indian Railways 25 per cent. Since operations began, 726 locomotives have been delivered to Indian Railways, and now 150 will be exported to Guinea. 'Over 99 per cent of the workforce here is from Bihar, and more than 1,500 people have been empowered through this project,' he added. PM Narendra Modi will be on a two-day visit to Bihar and Odisha starting Friday, where he will lay the foundation stone and inaugurate multiple development projects. According to a release, PM Modi will begin his visit from Bihar's Siwan, where he will inaugurate the new Vaishali-Deoria railway line project worth over Rs 400 crore and flag off a new train service on this route. The Prime Minister will also flag off the Vande Bharat Express between Patliputra and Gorakhpur via Muzaffarpur and Bettiah. In line with his commitment to conserving and rejuvenating the river Ganga, PM Modi will also inaugurate six Sewage Treatment Plants (STPs) under the Namami Gange project, worth over Rs 1800 crore. As per the release, PM Modi will lay the foundation stone for water supply, sanitation and STPs worth over Rs 3000 crore in various towns across Bihar. In a significant boost to power infrastructure in the region, the PM will lay the foundation stone for a 500 MWh Battery Energy Storage System (BESS) capacity in Bihar. (ANI)
