PAN card must for high-value gold loan
Customers planning to opt for gold loans of more than Rs 5 lakh will soon have to furnish their PAN numbers, the working group of the Reserve Bank of India (RBI) on Wednesday recommended to the gold loan companies.Updated: Feb 06, 2013 22:06 IST
Customers planning to opt for gold loans of more than R5 lakh will soon have to furnish their PAN numbers, the working group of the Reserve Bank of India (RBI) on Wednesday recommended to the gold loan companies.
“The working group recommends that gold loans NBFCs may obtain a copy of PAN card in all the loan proposals exceeding R5 lakh to strengthen the mechanism of KYC (Know Your Customer),” said the RBI report.
Currently, a PAN card is mandatory for jewellery purchases beyond R5 lakh. The banking regulator also suggested disbursing the gold loan amount via cheque in order to reduce risks associated with handling of high volume of cash transactions at branches of gold loan companies and KYC compliance.
“All loans exceeding a reasonable limit, say, R5 lakh may be disbursed by way of cheque in name of borrowers and not in cash,” said the report.
The RBI committee also suggested introduction of other savings products to discourage investment in physical gold, prohibition of bank finance for buying gold and revival of the two-decade old proposal to set up a Bullion Corporation.
Headed by RBI official KUB Rao, the working group suggested a three-pronged strategy — demand reduction, supply management and monetisation of gold stocks — to deal with the rising gold import which has widened the Current Account Deficit (CAD). The committee suggested the introduction of gold-linked financial instruments, gold bonds and tax incentives on instruments that can impound idle gold.
“Creation of an alternative asset class that may provide returns comparable to return on investment in physical gold with similar flexibility is important,” it said.
Gold import is the second major contributor to the CAD after oil. Gold import in April-December stood at $38 billion. In 2011-12 fiscal it was $56 billion.
The CAD, gap between inflow and outflow of foreign exchange, widened to a record high of 5.4% of GDP in July-September quarter.
“Large gold imports, if unche-cked, can potentially threaten the external stability and, therefore, there is an unambiguous need to moderate them,” the report said.