How does RBI's cash disbursal limit affect gold loan customers and businesses?

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₹20,000 for gold loan customers has stirred discussions across the financial sector. This directive aims to regulate cash transactions in the gold loan segment and address concerns related to transparency and accountability. This article reviews the implications of the RBI's advisory on both customers availing gold loans and businesses operating in the gold financing landscape.

The RBI's advisory brings much-needed clarity to the cash disbursement process in the gold loan segment. By setting a specific limit of ₹20,000, the regulator aims to streamline transactions and mitigate risks associated with cash-based lending practices. This move is expected to foster greater transparency and compliance within the industry.

Also Read: Gold continues to shine brighter: 5 key reasons to add this precious metal to your portfolio For customers availing gold loans, the shift towards non-cash disbursements may present certain challenges initially.

Traditionally, cash disbursements have been a preferred option for many borrowers due to their convenience and immediacy. However, with the RBI's directive, customers will need to adapt to receiving funds through bank accounts, electronic transfers, or cheque payments. While this transition may require adjustments for some customers, it ultimately promotes a more secure and traceable lending process.

India’s strides in recent years on electronic transfers such as UPI make this easy, yet there is some distance to go to eliminate cash transactions of large values, and this directive is a step in the direction. Gold financing companies, including prominent incumbents, banks as well as the new NBFCs, are well-equipped to comply with the RBI's advisory. These organisations have robust processes,