Gold Loan In Cash Restricted To Rs 20,000 For NBFCs

The Reserve Bank of India (RBI) in a notification on Thursday said that non-banking finance companies (NBFCs) cannot give more than Rs 20,000 in cash against gold loans. Earlier, gold loans above Rs 1 lakh were made mandatory to be disbursed though cheques. The new rule will come into effect on an immediate basis. 

A Non-Banking Financial Company (NBFC) is engaged in the business of loans and advances.

"The requirements under the Income Tax Act, 1961, as amended from time to time, would be applicable to all NBFCs with immediate effect. Currently, the relevant threshold under the Income Tax Act, 1961 is Rupees Twenty thousand," the central bank said in a statement.

Shares of leading gold loan companies Manappuram Finance and Muthoot Finance fell today. Manappuram Finance shares fell nearly 3 per cent to Rs 92 while Muthoot Finance dropped nearly 4 per cent to Rs 338. In comparison, the Sensex was up 0.20 per cent.