Gold Loans have cornered the largest share in loans sanctions by NBFCs in the first quarter of the fiscal amid a slow down in personal loans, latest data collated by Finance Industry Development Council (FIDC) an industry lobby group showed. Total gold loans sanctioned by NBFCs increased 26% year on year at Rs79,218 crore in the first quarter of the current fiscal even as sanctions for personal loans fell by 4%, indicating the impact of higher risk weights for unsecured loans by the Reserve Bank of India (RBI). This is a change from a year ago when personal loan by NBFCs topped the loan sanctions at Rs 63,495 crore a year ago.The FIDC data which is collated on the basis of actual sanction of loans from NBFCs, came just a couple of days after RBI warned that it would take regulatory on entites for violating norms if corrective measures are not taken within three months.Also Read: RBI warns of ‘yellow fever’ outbreakThe central bank pointed out that its onsite examinations had found several irregular practices in the industry while lending against gold. These include shortcomings in using sourcing third parties for sourcing and appraisal of loans, valuation of gold without the customer being present, lack of end use monitoring and also lack of transperancy while auctioning gold when a customer defaults.FIDC data shows that sanctions of gold loans were high by a wide margin of Rs 79,218 crore versus Rs 71,306 crore for personal loans. Housing loans remains the third largest chunk in sanctions.But property loans which are up 21% year on year is now the fourth largest loan sanctioned category ahead of unsecured business loans the pace of which has slowed down.NBFCs have slowed down lending to unsecured loans after RBI increased risk weights on consumer loans from banks and NBFCs last November, making it more expensive for lenders across the spectrum to offer loans in these segments. Risk weights refer to the amount of capital lenders have to set aside to cover for credit risk from a particular loan segment. A higher risk weighting requires banks to set aside more capital for those loans.Last November, RBI increased the risk weight on consumer credit for banks and NBFCs to 125% from 100%. Both banks and NBFCs have slowed lending to the unsecured segment after the RBI move. Though it seems lenders have moved towards the high yielding but secured gold loans business after the RBI diktat. Sectorial depolyment data from RBI shows that gold loan porfolio of banks increased by 41% in August the second fastest growing category that month after loans to renewable energy projects which increased 45%.