Latest Expert Exchange Queries

GST Demo Service software link: https://ims.go2customer.com
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft info@binarysoft.com
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
 
 
 
 
Popular Search: cpt :: list of goods taxed at 4% :: VAT Audit :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: ACCOUNTING STANDARD :: TDS :: Central Excise rule to resale the machines to a new company :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: due date for vat payment :: empanelment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: form 3cd :: ACCOUNTING STANDARDS
 
 
Latest Circulars »
 CAFRAL Conference on “Financial System and the Macroeconomy” (Opening remarks by Dr. Urjit R. Patel, Governor- December 7, 2017 – Mumbai)
 RBI to conduct overnight Variable Rate Repo auction under LAF on December 18, 2017
 Customer Protection - Limiting Liability of Customers of Co-operative Banks in Unauthorised Electronic Banking Transactions
  GST-Practical Difficulties In Filing And Solution, Code Of Ethics (Indirect Taxes)
 Sources of Variation in Foreign Exchange Reserves in India during April-September 2017
 Developments in India’s Balance of Payments during the Second Quarter (July-September) of 2017-18
 Professor Vijay Joshi, Emeritus Fellow, Merton College, Oxford, delivers the Fifteenth L. K. Jha Memorial Lecture titled ‘India’s Economic Reforms: Reflections on the Unfinished Agenda’
 Investment by Foreign Portfolio Investors (FPI) in Government Securities Medium Term Framework – Review
 Rationalisation of Merchant Discount Rate (MDR) for Debit Card Transactions
 How to save maximum tax from Sec 80C deductions for FY2017-18
 Settlement of Agency transactions in certain cases (for Funds and Agency Commission) directly from Reserve Bank of India

RBI-Bank Finance to NBFCs Predominantly Engaged in lending against Gold
May, 21st 2012

RBI/2011-12/568
DBOD.BP.BC.No. 106/21.04.172/2011-12

May 18, 2012

All Scheduled Commercial Banks 
(excluding RRBs)

Dear Sir,

Bank Finance to NBFCs Predominantly Engaged in lending against Gold

Please refer to paragraphs 94 to 96 (extract enclosed) of the Monetary Policy Statement 2012-13 announced on April 17, 2012 on Bank Finance to NBFCs Predominantly Engaged in Lending against Gold

2. The extant regulatory framework for bank exposure to NBFCs is prescribed in circular DBOD.No.FSD.BC.46/24.01.028/2006-07 dated December 12, 2006 titled Financial Regulation of Systemically Important NBFCs and Banks' Relationship with them.

3. NBFCs which are predominantly engaged in lending against collateral of gold jewellery (i.e. such loans comprising 50 per cent or more of their financial assets) have recorded significant growth in recent years, both in terms of their balance sheet size and physical presence. In view of regulatory concerns arising out of the rapid pace of business growth and concentration risk inherent in their business model, certain prudential measures like limiting Loan to Value (LTV) Ratio, increasing the minimum Tier I Capital requirement, prohibition on granting loans against bullion / primary gold and gold coins and other operational guidelines have been prescribed for NBFCs.

4. The rapid expansion of NBFCs predominantly engaged in lending against the collateral of gold jewellery has led to their increased dependence on public funds, including bank finance. In order to supplement the prudential norms prescribed for NBFCs as indicated in paragraph 3 above, banks are advised to:

(i) reduce their regulatory exposure ceiling on a single NBFC, having gold loans to the extent of 50 per cent or more of its total financial assets, from the existing 10 per cent to 7.5 per cent of banks capital funds. However, the above exposure ceiling may go up by 5 per cent, i.e., up to 12.5 per cent of banks capital funds if the additional exposure is on account of funds on-lent by NBFCs to the infrastructure sector. Banks which are currently having exposure to such NBFCs in excess of the above regulatory ceiling would be required to reduce their exposure within the prescribed limit at the earliest, but not later than six months from the date of this circular; and

(ii) have an internal sub-limit on their aggregate exposures to all such NBFCs, having gold loans to the extent of 50 per cent or more of their total financial assets, taken together. The sub-limits should be within the internal limit fixed by the banks for their aggregate exposure to all NBFCs put together.

Yours faithfully,

(Deepak Singhal)
Chief General Manager-in-Charge


Extract from Monetary Policy Statement 2012-13 announced on April 17, 2012.

Part B. Developmental and Regulatory Policies

IV. Regulatory and Supervisory Measures for Commercial Banks

Bank Finance to NBFCs Predominantly Engaged in Lending against Gold

94. NBFCs that are predominantly engaged in lending against collateral of gold jewellery have recorded significant growth in recent years, both in terms of their balance sheet size and physical presence. Certain prudential measures have been taken on account of regulatory concerns, given the rapid pace of their business growth and the nature of their business model which has inherent concentration risk. The measures include a loan-to-value (LTV) ratio not exceeding 60 per cent for loans against collateral of gold jewellery and a minimum Tier 1 capital of 12 per cent by April 1, 2014. It has also been stipulated that NBFCs should not grant any advance against bullion/primary gold and gold coins.

95. The rapid expansion of such NBFCs has led to their increased dependence on public funds, including bank finance. To supplement the prudential measures mentioned above, it is proposed that:

  • banks should reduce their regulatory exposure ceiling in a single NBFC, having gold loans to the extent of 50 per cent or more of its total financial assets, from the existing 10 per cent to 7.5 per cent of banks capital funds. However, exposure ceiling may go up by 5 per cent, i.e., up to 12.5 per cent of banks capital funds if the additional exposure is on account of funds on-lent by NBFCs to the infrastructure sector; and

  • banks should have an internal sub-limit on their aggregate exposure to all such NBFCs, having gold loans to the extent of 50 per cent or more of their total financial assets, taken together.

96. Detailed guidelines in this regard will be issued separately.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Wholesale Silver Jewelry

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions