Asmita Patil’s Post

💥💥The Reserve Bank of India (RBI) periodically updates its guidelines regarding gold loans to enhance transparency and ensure borrower protection. Key aspects typically include: 🎖️*Loan-to-Value (LTV) Ratio**: The maximum LTV ratio for gold loans is usually set at a certain percentage of the gold's value (recently it has been around 75%). 🎖️*Documentation**: Lenders are required to maintain proper documentation, including KYC (Know Your Customer) norms, to ensure identification and verification of borrowers. 🎖️*Interest Rates**: RBI guidelines mandate that interest rates on gold loans should be transparent and should not exploit borrowers. 🎖️*Repayment Terms**: Clear terms regarding the repayment schedule, including options for part repayment or foreclosure, should be provided. 🎖️*Insurance**: Lenders may be required to offer or recommend insurance for the gold pledged as collateral. 🎖️*Fair Practices**: Lenders must adhere to fair lending practices and must provide adequate information to borrowers regarding terms and conditions. For the most accurate and specific updates, checking the official RBI circulars or announcements is recommended, as these guidelines can change over time.🫡🫡

Its time for bank deposits interest income to be taxed at low rate, independent of the tax slab. This would help in two ways: 1. Help calm down the stock markets from their abnormal valuations, largely driven by domestic mutual fund money. Atleast some portion of mutual fund SIP money will be diverted to bank deposits 2. Help the banks garner much needed deposits to match the credit growth #investments, #pmoindia, #nirmalasitaraman, #ministryoffinance Lenders are making it far more profitable for you to save money

Just a few days ago, the Reserve Bank of India (RBI) issued cease-and-desist orders to four NBFCs and lenders, freezing their loan sanctions and disbursals mainly due to one damning reason — excessive interest rates. In an age where risk-based pricing has become the norm, and high rates for riskier borrowers are justified by economic concepts such as adverse selection, it begs the question: How much is too much? In this edition of The Big Picture, our CEO Rajat Deshpande takes a closer look at a question that cuts to the heart of ethical lending: What truly constitutes a fair interest rate? When does justifiable pricing tip into exploitation? Read the full article to explore where fair risk-based pricing ends and predatory lending begins. https://lnkd.in/gugV2nVM

In the latest data released by Bangladesh Bank, the magnitude of defaulted loans within the banking sector has reached an unprecedented high, standing at Tk 1,82,295 crores as of the end of March 2024. This marks a significant increase from Tk 1,45,633 crores recorded just three months earlier. The year-on-year comparison reveals an alarming rise of Tk 50,674 crores, highlighting a growing financial crisis.

During the previous regime, Beximco and S. Alam effectively took control of Bangladesh's banking sector, blatantly violating critical regulations like the single borrower exposure limit and related party transactions. While the law allows a borrower to access up to 25% of a bank’s equity capital to a single group, these entities shockingly exceeded that limit, reaching 410%—a direct breach of the Bank Company Act. Yet, the central bank and key officials at the time, who were responsible for ensuring regulatory compliance, chose to remain silent observers.  The question arises: can we not act against such blatant violations? Theoretically, every depositor of state-owned and Islamic banks has the right to sue against these irregularities. Not just the borrowers, but the former central bank governor, officials of the concerned banks, and those who facilitated this financial exploitation should also face legal consequences.  This unchecked financial plundering during the previous regime not only undermined the banking sector but also jeopardized the country’s economic stability. It is high time to hold accountable those who allowed such misconduct and take steps to ensure such crimes are never repeated.

RBI Sounds the Alarm on Gold Loans: A Growing Concern The Reserve Bank of India (RBI) has recently issued a stern warning to all banks and financial institutions offering gold loans. With the demand for these loans surging from 20% to a staggering 41% now, the central bank has identified several concerning issues. One of the most significant red flags is the involvement of third-party firms in approving gold loans without conducting adequate due diligence. This lack of oversight has led to a rise in fraudulent activities and increased risks for lenders. Moreover, some gold loan lending companies and banks have reduced their transparency, making it difficult for borrowers to understand the terms and conditions of their loans. The RBI has aptly termed these problems as "Yellow Fever," highlighting the potential dangers of unchecked gold loan lending. To address these concerns, the central bank has given financial institutions a three-month grace period to rectify their practices. If these issues persist, the RBI has vowed to take strict action against those who fail to comply. Some potential solutions which I think can be : Increased Transparency: Lenders should provide clear and concise information about loan terms, interest rates, and repayment schedules to borrowers. This will help them make informed decisions and avoid falling prey to predatory lending practices. Regular Audits: Independent auditors should conduct regular assessments of gold loan operations to ensure compliance with regulatory guidelines and identify potential risks. Collaboration with Law Enforcement: Financial institutions should work closely with law enforcement agencies to report suspicious activities and prevent fraud. Consumer Education: The RBI and industry associations should launch awareness campaigns to educate consumers about the risks and benefits of gold loans. This will empower borrowers to make informed choices and protect themselves from scams. The surge in demand for gold loans presents a significant opportunity for the financial sector. However, it is imperative that lenders exercise caution and adhere to responsible lending practices. By addressing the issues highlighted by the RBI, banks and financial institutions can contribute to a healthy and sustainable gold loan market. #goldloans #RBI #financialregulation #lendingpractices #consumerprotection #IndianEconomy #EconomicNews #GovernmentPolicies #FinancialRegulations #EconomicGrowth #Inflation #InterestRates #Gold #GoldInvestments #Loans #PersonalLoans #HomeLoans #GoldLoans #RBI #Finance #Banking #FinancialServices #FinancialMarkets #MonetaryPolicy #CentralBanking

#BBpolicy #globalstandard #bankingsolvencystandard Bangladesh Bank (BB) has recently issued updated guidelines on loan classification and provisioning, focusing on improving compliance and financial health in the banking sector. Key changes include adjustments to loan classification timelines and provisioning requirements. Classification Criteria Updates: Loans overdue by 90 days will now be classified as "Substandard," aligning with international practices. This is a shift from the earlier standard of 180 days. Provisioning rates remain at 20% for substandard loans, 50% for doubtful loans, and 100% for bad loans. Additionally, general provisioning for performing loans varies based on their nature. Impact on Banks: The changes are aimed at reducing the amount of non-performing loans (NPLs) on bank balance sheets. However, this could increase provisioning requirements and temporarily reduce bank profitability. Banks are also required to maintain stricter compliance with reporting and monitoring of loan classifications. Introduction of "Special Mention Accounts" for NBFIs: Non-bank financial institutions (NBFIs) must now classify loans overdue by specific periods as "Special Mention Accounts" before they are considered substandard. This provides an intermediate step to monitor potential risks. Further Measures: The BB is introducing tighter rules on willful defaulters and plans to reduce the write-off period for bad loans from three years to two years, with recovery units established in each bank to address this. These updates are expected to bring Bangladesh's financial regulations closer to global standards and improve loan recovery efforts while potentially increasing initial challenges for banks and borrowers. For further details, you can visit the official circulars on the Bangladesh Bank website

Check out the interview of our MD & CEO Mr. P R Seshadri in The Hindu Business Line. #SIB #SouthIndianBank #CEO #Interview #TrustmeetsTechsince1929

Wilful Defaulters and Large Defaulters August 11, 2024 Reserve Bank of India (RBI) has issued directions on wilful defaulters and large defaulters. What is wilful default? Wilful default shall be deemed to have occurred – When the borrower defaults in meeting payment / repayment obligations to the lender. When the guarantor does not honour the guarantee when invoked by the lender. and any one or more of the following features are noticed – https://lnkd.in/dPY-5aK5 #rbi #rbipolicy #bank #banks #bankingregulation #bankingregulations #aifi #ucb #ucbs #nbfc #nbfcs #loan #loans #borrower #borrowers #lender #lenders #default #wilfuldefault #defaulter #wilfuldefaulter #guarantor #gurantors #largedefaulter #credit #creditfacility #diversion #siphoning #rrb #rrbs #committee #committees #npa #npas #identification #classification #creditinformation

Amid Rise in Gold price are you aware🤔 The 'Yellow Outbreak' in Gold Loans: 🟡 How Banks Can Improve & Compete with Unregulated Lenders The Reserve Bank of India (RBI) has raised a red flag — or should we say, a "yellow outbreak" 🟡 — on current gold loan practices. But what does "yellow outbreak" mean? It symbolizes the rapid and unchecked growth of gold loans, represented by the color yellow, like the precious metal itself. This boom has led to concerning practices, causing the RBI to step in and call for tighter controls. With gold loans growing by 41% 📈 in August, some banks have been called out for irregularities, such as using third-party agents, valuing gold without the customer being present, and not being transparent when auctioning gold if loans aren’t repaid. Even major players like IIFL Finance faced restrictions 🚫 for lapses in lending processes earlier this year. While the RBI has given banks three months ⏳ to clean up their practices, the bigger challenge lies in competing with the unregulated gold loan market, which offers quick and flexible lending with fewer formalities. 💡 How Can Banks Improve? 1. Faster Loan Approvals ⚡: Streamlining processes with digital tools and quicker appraisals can help banks match the speed of unregulated lenders while maintaining transparency. 2. Clear Communication & Fair Valuation 💬: Ensuring gold is valued in the customer’s presence and offering fair terms will build trust. 3. Better Customer Experience 🤝: Providing easy access to loan details, repayment options, and updates through digital channels can enhance customer convenience without compromising safety. 🚀 The Way Forward: With RBI tightening the rules, banks need to act fast to bring transparency, improve customer service, and find a balance between speed and safety to prevent the spread of this "yellow outbreak." Your Thoughts? How can banks win back the trust of gold loan customers while staying ahead of unregulated lenders? #GoldLoan #YellowOutbreak #RBI #BankingReform #CustomerTrust #IIFL #Finance #war #inflation