Gold price fall not a worry for NBFCs, but banks need to be watchful

The correction in gold prices in recent months is not expected to materially impact the asset quality of non-banking financial companies (NBFCs) lending against gold. Apart from periodically collecting interest over the past few fiscals, they have ensured that disbursement loan-to-value (LTV) is maintained below 75 per cent, ratings agency Crisil said. On a 30-day rolling basis, gold price has corrected 10 per cent over the past six months, while on an absolute basis it fell twice that rate.
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