Mumbai, May 8 -- The Reserve Bank of India (RBI) cautioned non-bank finance companies (NBFC) on Wednesday, advising them against providing cash loans exceeding the permitted threshold of Rs 20,000 ($240), media reported.

This action is expected to largely curtail cash disbursements to people borrowing against gold, reported Reuters.

The advisory from the central bank follows recent regulatory measures taken against IIFL Finance, the countrys second-largest gold loan provider, for breaches related to cash disbursement and other regulations, said the report.

Retail credit in India has seen a rapid surge, notably with gold loans witnessing a threefold increase over the past four years.

According to at least a dozen sources speaking to Re...