Advances Against Bullion/Primary Gold
Banks are prohibited from granting any advance against bullion/ primary gold. However, specially minted gold coins sold by banks are not treated as “bullion” or “primary gold” and hence the same is acceptable as security upto 50 gms per customer. Such loans to be granted by the bank, may be covered under the policy framed by the bank’s Board, in terms of RBI circular DBOD.No. BC. 138/21.01.023/94 dated November 22, 1994. Further, for cases wherein advances have been granted against the gold coins it should be ensure that the end use of funds is for approved, non- speculative purposes. Banks are also required to desist from granting advances to silver bullion dealers which are likely to be utilised for speculative purposes.