New RBI Gold Loan Rules: LTV Ratio Raised to 85%; Key Do’s and Don’ts
The Reserve Bank of India (RBI) has introduced new rules for gold loans, raising the Loan-to-Value (LTV) ratio to 85% and implementing stricter regulations to protect borrowers and prevent misuse. Stay updated with the latest changes and key points.
Gold LoanRbiLtv RatioBorrower ProtectionCollateralReal Estate NewsJun 07, 2025
The new rules apply to commercial banks (excluding Payment Banks), cooperative banks (Urban Cooperative Banks, State Cooperative Banks, Central Cooperative Banks), Non-Banking Financial Companies (NBFCs), and Housing Finance Companies (HFCs). As announced by RBI Deputy Governor Sanjay Malhotra, the Loan-To-Value (LTV) ratio for small gold loans has been increased to 85%, up from the earlier proposed 75%. This change is designed to provide more financial support to borrowers while maintaining the stability of the lending system.
Customers can now secure collateral loans only against gold and silver jewellery, ornaments, and coins. Loans against primary gold or silver (such as bullion) or related Exchange Traded Funds (ETFs) and Mutual Funds (MFs) are not permitted. The valuation norms have been standardized to ensure transparency and fairness. The intrinsic metal value is considered based on the 30-day average or the previous day’s price, whichever is lower, as published by the India Bullion and Jewellers Association (IBJA) or SEBI-approved exchanges. Gems and stones are excluded from the valuation.
To ensure borrower protection, several stringent measures have been put in place. Borrowers must be present during the assaying process, and the assay certificate must be shared and documented. Loan agreements must include detailed auction procedures and ensure cost transparency. This helps borrowers understand the entire process and the costs involved.
One can opt for loans for consumption or income generation purposes. Bullet loans for consumption are capped at 12 months, and the maximum gold loan limit per borrower is 1 kg of ornaments and 50 g of coins. The lender must store the collateral in secure, employee-managed branches and return it within seven working days of loan repayment. If a borrower defaults on the loan, the auction process must be transparent, conducted first locally and then online.
There is a fine of Rs 5,000 per day if a lender delays releasing the collateral. Additionally, there is a provision for full repair or replacement in case of loss or damage to pledged items. Misleading gold loan advertisements are strictly prohibited, and Know Your Customer (KYC) and Anti-Money Laundering (AML) norms must be strictly followed. Unclaimed collateral, two or more years after repayment, must be reported bi-annually.
These new rules are designed to enhance the transparency and fairness of the gold loan market, ensuring that both borrowers and lenders are protected. By raising the LTV ratio and implementing stricter regulations, the RBI aims to promote a more robust and trustworthy financial environment.
Frequently Asked Questions
What is the new LTV ratio for gold loans?
The new LTV ratio for gold loans has been increased to 85%, up from the earlier proposed 75%.
Can I take a gold loan against bullion or ETFs?
No, loans against primary gold or silver (such as bullion) or related Exchange Traded Funds (ETFs) and Mutual Funds (MFs) are not permitted. Loans can only be taken against gold and silver jewellery, ornaments, and coins.
What is the maximum gold loan limit per borrower?
The maximum gold loan limit per borrower is 1 kg of ornaments and 50 g of coins.
What happens if a borrower defaults on the gold loan?
If a borrower defaults on the gold loan, the auction process must be transparent, conducted first locally and then online. There is a fine of Rs 5,000 per day if a lender delays releasing the collateral.
What are the valuation norms for gold loans?
The valuation norms are based on the 30-day average or the previous day’s price, whichever is lower, as published by the India Bullion and Jewellers Association (IBJA) or SEBI-approved exchanges. Only the intrinsic metal value is considered, and gems and stones are excluded.
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