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RBI/2005-06/318
RPCD.CO.RF.BC.No. 67 /07.40.06/2005-06
March 9, 2006
All State Co-operative Banks (SCBs)
and
District Central Co-operative Banks (DCCBs)
Dear Sir / Madam
Advances against Gold Ornaments
and Jewellery
State Co-operative Banks (SCBs)
and District Central Co-operative Banks (DCCBs) may be granting advances for
various purposes against the security of gold ornaments and jewellery as part
of their lending policy.
2. As you are aware, hallmarking
of gold jewellery ensures the quality of gold used in the jewellery as to caratage,
fineness and purity. Therefore, SCBs / DCCBs would find granting of advances
against the security of such hallmarked jewellery safer and easier. Preferential
treatment of hallmarked jewellery is likely to encourage practice of hallmarking
which will be in the long-term interest of consumer, lenders and the industry.
3. Therefore, while considering
granting advances against jewellery, SCBs / DCCBs may keep in view the advantages
of hallmarked jewellery and decide on the margin and rates of interest thereon.
It should, however be ensured that such advances are not granted for speculative
purposes.
Yours faithfully,
(G. Srinivasan)
Chief General Manager-in-Charge
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