RBI’s New Gold Loan Rules: Here’s How The Latest Guidelines Will Affect You | Explained

Last Updated:June 09, 2025, 13:54 IST

The RBI’s new gold loan regulations will be applicable to all commercial banks, NBFCs, cooperative banks, and housing finance companies

RBI’s New Gold Loan Rules: The Reserve Bank of India (RBI) has unveiled a new framework for gold and silver loans, effective from April 1, 2026. The reforms, announced on June 6, aim to enhance borrower protection, transparency, and lender accountability across commercial banks, NBFCs, cooperative banks, and housing finance companies.

Here are the eight major changes borrowers need to know:

1. Higher LTV for Small Loans

Borrowers can now get up to 85% of the gold value as a loan, up from 75%. This Loan-to-Value (LTV) cap applies to total loan amounts up to Rs 2.5 lakh, including interest. For example, if your gold is worth Rs 1 lakh, you can now borrow up to Rs 85,000.

2. No Credit Appraisal for Smaller Loans

Lenders will no longer require detailed income assessments or credit checks for gold loans below Rs 2.5 lakh, improving access for low-income and rural borrowers.

3. 12-Month Limit for Bullet Repayment Loans

Bullet repayment loans—where interest and principal are paid together at the end—must now be repaid within 12 months.

4. 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 limits apply per borrower across all lender branches.

5. Faster Return of Pledged Items

Lenders must return pledged gold or silver on the same day the loan is closed, or within 7 working days. If delayed, they must pay Rs 5,000 per day in compensation to the borrower.

6. Mandatory Compensation for Loss or Damage

If pledged gold or silver is lost or damaged during audits or handling, lenders must fully compensate borrowers.

7. Transparent Auction Process

In case of loan defaults:

• Lenders must issue proper notice before auctioning gold.
• The reserve price must be at least 90% of the market value (85% after two failed auctions).
• Any surplus from the auction must be returned to the borrower within 7 working days.

8. Clear Communication in Local Language

All loan terms and valuation details must be provided in the borrower’s preferred or regional language. For illiterate borrowers, these details must be shared in the presence of an independent witness.

Implementation Timeline

The new rules take effect from April 1, 2026. Loans issued before this date will continue under existing norms.

By introducing these reforms, the RBI aims to standardize practices, strengthen borrower protection, and improve transparency in India’s gold loan segment.

Aparna Deb

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More

Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More

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