Domestic rating agency Crisil has said that the Reserve Bank of India’s (RBI) recent notification asking financiers to review their gold loan practices can slow down loan growth in the near-term and lead to an uptick in asset quality stress. It said potentially, this could impact gold loan disbursements during the transition phase and curb growth in the business. It can be noted that a few weeks ago, RBI had flagged certain irregular practices in loan against gold jewellery and asked lenders to comprehensively review their policies, processes and practices to identify gaps and initiate remedial measures in a time-bound manner.
According to the agency, the notification had flagged deficiencies in the monitoring of the loan-to-value (LTV) ratio, asset classification norms for overdue loan accounts, and inadequate due-diligence in monitoring the end-use of gold loans. It said reported loan delinquencies may see some uptick as entities revisit their current non-performing asset (NPA) recognition norms and/or policies and procedures for disbursing loans to existing customers.
However, the rating agency said it was quick to add that in the gold loan business, credit cost is the more appropriate indicator of asset quality and overall credit losses are seen under control because of Indians' emotional attachment to the precious metal. It added that ability of lenders to maintain conservative LTV as well as to conduct timely auctions and recover dues also supports low ultimate credit losses.
MoneyWorks4Me rating and ranking of funds for SIP is available to subscribers only. Moneyworks4Me is not a rating and ranking agency, however it is required that users have a way of selecting funds and building a Portfolio. The method used by it are described below to enable users to understand the logic behind the rating and ranking Subscriber will find more details on this in the various content made available from time to time. In case you need more please write to besafe@moneyworks4Me.com
MoneyWorks4Me rates and ranks mutual funds based on the following data-driven system:
Funds ranking in screeners: Performance Consistency and Quality are two parameters used for ranking funds for SIP. The ranking as follows GG, GO, GR, OG, OO, OR, RG, RO and RR.
With the same color-coded funds, the one with the higher Average 3-year rolling returns (over 5 to 10 years), the number that appears in the Performance tag, ranks higher.
Here is the summary:
The third tag Upside Potential is not relevant for SIP. It is relevant for lumpsum investments in Mutual Funds.
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