New Delhi, July 29 The gross NPAs for gold loans extended by NBFCs in India have risen to Rs 4,470 crore as on March 31, 2025 -- from Rs 3,634 crore in the year-ago period -- while in the case of commercial banks, the corresponding figure is Rs 2,162 crore -- up from Rs 1,513 crore as on March 31, 2024, the Parliament was informed on Tuesday.
The data for middle and upper layer NBFCs shows that Muthoot Finance Ltd alone accounts for Rs 3,369 crore of NPAs as on March 31, 2025. Manappuram Finance which is second on the list has piled up gross NPAs to the tune of Rs 436 crore, according to figures furnished by Minister of State for Finance, Pankaj Chaudhary, in reply to a question in the Rajya Sabha.
The data show that the gross NPAs of banks against gold loans is the highest in the case of private sector lender ICICI Bank at Rs 452 crore. Union Bank of India figures at the second spot with gross NPAs of Rs 155 crore, followed by the SBI, the country’s largest bank, which has gross NPAs of Rs 154 crore for loans pledged against gold as on March 31, 2025.
The minister also stated that the Reserve Bank of India (RBI) has carried out a review of the adherence to prudential guidelines as well as practices being followed by Supervised Entities (SEs) with regard to loans against pledge of gold ornaments and jewellery.
The review, as well as the findings of the onsite examination of select SEs by the Reserve Bank, indicate several irregular practices in this activity. The major deficiencies include shortcomings in use of third parties for sourcing and appraisal of loans, valuation of gold without the presence of the customer and inadequate due diligence and lack of end use monitoring of gold loans.
Besides the RBI also found a lack of transparency during auction of gold ornaments and jewellery on default by the customer, weaknesses in monitoring of Loan-toValue (LTV) and incorrect application of risk-weights.
The minister further stated that RBI has issued a circular dated September 9, 2024 on “Gold loans - Irregular practices observed in grant of loans against pledge of gold ornaments and jewellery” advised NBFCs and banks to comprehensively review their policies, processes and practices on gold loans to identify gaps, including those highlighted in the circular, and initiate appropriate remedial measures in a time-bound manner.
The NBFCs and banks have submitted Action taken Report (ATR) in response to RBI circular to strengthen the systems and practices observed in grant of loans against pledge of gold ornaments and jewellery.
As part of the action taken report, the banks have undertaken a review of their policies, processes, and practices on gold loan to identify gaps, including those highlighted in the circular from RBI referred above.
Further, the banks have reported they have strengthened the process in place for monitoring of loan-to-value (LTV) limits and breaches thereof. All accounts where LTV is breached are followed up for recovery of overdue amount. Wherever the borrowers are not forthcoming with payment of overdue amount, the banks can initiate the auction process for recovery of their dues after following the laid down processes.
The banks have strengthened the process for ensuring end use of agricultural gold loans, by making the documentation requirement more stringent.
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