RBI issued instructions regarding gold loan, now NBFC cannot give more than this amount in exchange for gold loan
Along with the government, steps are also being taken by the Reserve Bank of India (RBI) to control inflation in the country. To avoid excessive cash flow, RBI has instructed non-banking financial companies (NBFCs) not to give more than Rs 20,000 in cash in exchange for gold. Earlier this week, RBI banned the distribution and approval of gold loans.
The Reserve Bank of India (RBI) has directed non-banking financial companies (NBFCs) to operate only as per income tax rules. According to Income Tax law, only cash up to Rs 20,000 can be given in exchange for gold.
Earlier this week, RBI had also advised small finance companies to follow Section 269SS of the Income Tax Act.
According to section 269SS, any person can make payment through specified methods. If no other person can take the deposit or loan amount.
Only Rs 20,000 will be provided as cash going forward, per RBI directive. This decision was made by the bank after the Central Bank discovered certain issues while inspecting IIFL Finance.
VP Nandakumar, MD and CEO of Manappuram Finance, commented on the RBI ruling, stating that it has insisted on the Rs 20,000 cap on cash loan amounts.
Increased compliance in the NBFC sector is the goal of the recent RBI directive, according to Umesh Mohanan, CEO of Indel Money, to guarantee a smooth transition in bank transfers.
While this may bring transparency and better compliance, and is a step in the right direction towards the beginning of Digital India, it may slow down the adaptability of rural India, where many individuals are not part of the formal mainstream.
