The Association of gold loan companies on Monday suggested that companies should reduce their lending rates in line with fall in prices of the yellow metal.
The industry body said it will continue to monitor the price movements of the precious metal and suggest its members to revise lending rates accordingly. However, it also added that despite fall in prices of gold, the demand for loans has continued unaffected.
"Members confirm loan demand continues to be robust in spite of reduction in the amount lent per gramme of gold. It is also noticed there is a regular redemption of earlier loans sanctioned at higher amount per gramme of gold," it said.
A leading gold loan company said that they mainly provide loans against household jewellery where impact of such fluctuations is minimum and even if there is impact, then still non-performing asset levels are low compared to the disbursements.
Besides the body also asked its members to review their existing collection mechanism and further strengthen it and also keep an eye on overdue and high loan-to-value loan accounts.