Gold Loan: Know RBI new guidelines before visit bank

Gold Loan: The Reserve Bank of India (RBI) has issued new, comprehensive guidelines regarding loans against gold and silver collateral, which include a tiered increase in the maximum Loan-to-Value (LTV) ratio for specific loan slabs.

These new directions are set to be fully implemented by April 1, 2026, for most provisions. The maximum LTV ratio, which is the percentage of the collateral’s value that can be granted as a loan, has been revised as follows for consumption loans:

Loan Amount Slab (Rs) and Maximum LTV Ratio:

Up to Rs 2.5 lakh – 85%

Above Rs 2.5 lakh up to Rs 5 lakh – 80%

Above Rs 5 lakh – 75%

This prescribed LTV ratio must be maintained throughout the entire loan tenor, not just at the time of loan disbursal.

Other Important Guidelines for Gold and Silver Loans:

The new RBI guidelines also introduce several other rules to standardize and strengthen the lending process:

Collateral Limits:

Maximum gold ornaments/jewellery: 1 kg per borrower.

Maximum gold coins: 50 grams per borrower.

Maximum silver ornaments/jewellery: 10 kg per borrower.

Maximum silver coins: 500 grams per borrower.

Eligible Collateral: Loans are allowed only against gold/silver ornaments, jewellery, and coins. Loans cannot be granted against primary gold/silver (bullion, ingots, bars) or financial assets backed by them (like Gold ETFs or Mutual Funds).

The maximum tenure for consumption loans with bullet repayment (where principal and interest are paid at maturity) is capped at 12 months.

Valuation Standards:

Valuation must be done at the lower of the 30-day average price or the previous day’s closing price (as published by IBJA or a SEBI-recognized exchange). Only the intrinsic value of the metal (excluding stones, gems, etc.) will be considered for the loan value.

The borrower must be present during the valuation, and a certificate detailing the purity and net weight must be provided. Lenders must release the pledged collateral within seven working days after the full loan repayment.14 A penalty of Rs 5,000 per day will be charged for any delay beyond this period.

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