Mumbai, Mar 10 (KNN) The Reserve Bank of India (RBI) has put a cap of Rs 20,000 for non-banking financial companies to disburse loan against gold in cash. Above that they can only disburse cheques for loan against gold.

RBI in a notification on Thursday said that non-banking finance companies (NBFCs) cannot give more than Rs. 20,000 in cash against gold loans.

Earlier, gold loans above Rs. 1 lakh were made mandatory to be disbursed though cheques. The new rule will come into effect on an immediate basis.

"The requirements under the Income Tax Act, 1961, as amended from time to time, would be applicable to all NBFCs with immediate effect. Currently, the relevant threshold under the Income Tax Act, 1961 is Rupees Twenty thousand," the central bank said in a statement.

This move should be seen in the backdrop of the government scrapping Rs. 500 and Rs. 1000 bank notes during the demonetisation period and for pushing digital payments. (KNN Bureau)