The Reserve Bank of India (RBI) on Monday asked gold loan financiers to review policies, processes and practices while offering such loans. The central bank’s direction came after it found major deficiencies in loans offered by supervised entities (SEs) against pledge of gold ornaments and jewellery. “All SEs are advised to comprehensively review their policies, processes and practices on gold loans to identify gaps and initiate appropriate remedial measures in a time bound manner,” RBI said in a notification. Some irregularities included shortcomings in use of third parties for sourcing and appraisal of loans; valuation of gold without the presence of the customer; inadequate due diligence and lack of end use monitoring of gold loans; and lack of transparency during auction of gold ornaments and jewellery on default by the customer. The RBI in its review also found weaknesses in monitoring of LTV (loan-to-value ratio) and incorrect application of risk-weights.