Mumbai Jan 9 : People who want to avail Gold Loan can borrow more as Reserve Bank of India on Wednesday allowed Non Banking Financial Companies to lend up to 80 percent of the amount of metal with an increase of 20%.


RBI said, "It has been decided to raise the LTV (Loan-To-Value) ratio to up to 80 per cent for loans against the collateral of gold jewelry from the present limit of 60 per cent with immediate effect".



RBI has increased the cap after viewing the growth of gold loan portfolios of these firms in the recent past and also taking into attention the experience so far.


Earlier NBFCs were offering 60 per cent of the market rate of gold against the gold pledged by people as loan.  This decision was taken by NBFCs in March 2012 in view of the rapid pace of growth  and nature of the business of NBFCs which could lead to adverse movement of gold prices.


Central Bank of India said that the loan amount in case of gold loan will be dependent on its intrinsic value and no other cost elements like making charges will be added thereto.