Maximum LTV under RBI guidelines is 75%. So if gold price drops by more than 25% in a span of three months, only then chances of NPA increase right? So we cannot simply say whenever gold prices drop chances of NPA are high. They recaliberate their systems every three months to account for changes in gold prices and interest rates. There exists high margin of safety in gold business than we think. Also, gold is emotionally attached to most of the Indian family and these people won’t look at marginal profitability when their sentiments are attached. That’s my view.
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