The Reserve Bank of India (RBI) has announced an overhaul of gold and silver loan regulations. The new framework, released on June 6, introduces borrower-friendly reforms while tightening conduct rules for lenders.
The revised rules apply to all commercial banks, NBFCs, cooperative banks, and housing finance companies. Borrowers taking loans against gold and silver jewellery, ornaments, or coins should note the following eight major changes:
Higher LTV for small loans
Borrowers can now get up to 85% of the gold value as a loan, up from 75%. This new Loan-to-Value (LTV) cap applies to total loan amounts up to ₹2.5 lakh, including interest.
For example, if your gold is worth ₹1 lakh, you can now borrow ₹85,000 instead of ₹75,000 earlier.
No credit appraisal for loans below ₹2.5 lakh
Lenders won’t require detailed income assessment or credit checks for gold loans below ₹2.5 lakh. This move is aimed at easing access for low-income and rural borrowers.
12-month cap on bullet repayment loans
Consumption loans with bullet repayment—where interest and principal are paid together at the end—must now be repaid within 12 months.
Limits on gold and silver pledged
Borrowers can pledge:
- Gold ornaments up to 1 kg
- Gold coins up to 50 grams
- Silver ornaments up to 10 kg
- Silver coins up to 500 grams
These caps are per borrower and apply across all branches of a lender.
Faster return of gold after repayment
Lenders must return the pledged gold or silver on the same day of loan closure, or within 7 working days.
If delayed, they must pay ₹5,000 per day to the borrower as compensation.
Mandatory compensation for loss or damage
If the pledged gold or silver is lost or found damaged during audits or return, lenders must compensate borrowers in full.
Transparent auction process
In case of loan defaults:
- Lenders must give proper notice before auctioning gold.
- The reserve price must be at least 90% of market value (85% after two failed auctions).
- Surplus from auction must be returned to the borrower within 7 working days.
Clear communication in local language
Loan terms and valuation details must be shared in the borrower’s preferred or regional language. Illiterate borrowers must be informed in front of an independent witness.
When do these rules apply?
The new framework will take effect from April 1, 2026. Loans issued before this date will follow earlier norms.
With these new norms, the central bank aims to bring uniformity, transparency, and borrower protection into the gold loan segment.