Traditional gold loan companies `fully support' RBI circular on guidelines

The Association of Gold Loan Companies (AGLOC) has said it fully supports the Reserve Bank of India’s  September 30 circular, which emphasises the need for adherence to RBI guidelines and transparent practices in the gold loan sector.

"As key players in this sector, traditional gold loan companies are committed to maintaining the highest standards of compliance and integrity in every aspect of their operations," Thomas George Muthoot, vice-chairman and secretary of AGLOC, noted in a statement. 

The RBI circular highlights areas where improvements are needed within the sector, particularly regarding third-party practices, the valuation of gold, customer transparency, and the monitoring of loan portfolios. Mr Muthoot said all traditional gold loan companies under AGLOC have set up robust systems to ensure compliance with the updated guidelines.

Proactive steps taken

Mr Muthoot reiterated that traditional gold loan companies had always prioritised customer trust, transparency, and risk management. The companies had taken proactive steps to strengthen internal processes and policies, monitor Loan-to-Value (LTV) ratios, improve the due diligence process, and ensure transparency and fairness.

"We fully align with the RBI’s goal of fostering a responsible and transparent financial ecosystem," Mr. Muthoot said. The traditional gold loan companies have already commenced a thorough review of their policies and will continue to work closely with the RBI to address any potential gaps, he said. AGLOC would provide continuous updates to the RBI as per the required timeline.