Reserve Bank of India vide notification dated May 9, 2014, allowed banks to lend more money or grant loans sanctioned by UCBs upto 75% of the value of gold ornaments and jewellery. It also includes bullet repayment loans against pledge of gold jewellery. For ensuring the transparency to the borrower, it has also been decided that gold jewellery accepted as security/collateral will have to be valued at the average of the closing price of 22 carat gold for the preceding 30 days as quoted by the India Bullion and Jewellers Association Ltd. If the purity of the gold is less than 22 carats, the bank should translate the collateral into 22 carat and value the exact grams of the collateral. In other words, jewellery of lower purity of gold shall be valued proportionately.
also does not amount to deprive a person of his right to property which is a constitutional right.
To read the notification, click here