Synopsis
The hike in loan-to-value ratio on non-agriculture gold loans by banks will have far-reaching consequences. Not only will it inject cash into the economy, helping embattled small businesses and individuals alike, but it may also shake up the financial system, with banks muscling into the territory of NBFCs.
It may well come as a lifeline for many embattled small businesses and distressed households in India. By effectively monetising the gold stashed away by Indians, the government hopes to give a boost to systemic liquidity, crucial to spurring spending and consumption, catalysing economic recovery in the process. Recently, the Reserve Bank of India (RBI) announced a hike in the loan-to-value ratio (LTV) on non-agriculture gold loans by banks
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