The ceiling on pricing, in contrast to the general freedom given to banks in pricing loans, is because free market still does not exist for the poor and hence, pricing is prone to distortions. The Nair Committee’s recommendation to restrict the bank loans for on-lending, buy-outs and securitization to a maximum of 5% of ANBC is not accepted.
This is to allow banks to build up PSL portfolio through the route of outright purchase/ investments in securitised assets. Investments/Purchase/ Assignment transactions undertaken by banks with NBFCs, where the underlying assets are loans against gold jewellery 29.