The Reserved Bank of India (RBI) has recently revised rules for loans against gold, which will be effective from 1 April 2026. Gold has been one of the most prized possessions and financial instruments in India. Besides preserving wealth and using it as adornment, you can use gold as collateral for a Gold Loan.
This financing is so popular that gold loans doubled in FY25 to ₹2.1 lakh crore. However, like any other financing, lenders follow RBI rules for Gold Loan, which the regulatory body revises periodically.
How will these new RBI rules for gold loans affect you and your Gold Loan? This blog discusses all the new RBI rules for gold loans and how these rules will affect the tenure and repayment cycle. Read on!
New RBI Rules for Gold Loan: Key Changes
Here are some of the main changes according to the new RBI rules for gold loans in 2025:
1. Increased Loan-to-Value (LTV) Ratio for Small Loans
Previously, borrowers were able to avail themselves of loans up to 75% of the value of the pledged gold. The new system provides 85% of this for loans up to ₹2.5 lakh. Here are the key changes in Loan-to-Value (LTV) ratio:
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For example, if your gold value is ₹1,00,000, then you would be able to get a loan of ₹85,000 instead of ₹75,000. This higher LTV ratio benefits marginal borrowers, who are in urgent need of money, and promotes financial inclusion without placing undue burden on borrowers.
2. Easier Access for Loans Below ₹2.5 Lakh
One of the biggest changes in the new RBI rules for gold loans is that it exempts the complex credit appraisal for loans up to ₹2.5 lakh. Under these limits, lenders do not need to do detailed income verification or credit checks.
- Benefit: People with low incomes and rural residents can now apply for gold loans faster.
- Risk Management: Since the loan is underwritten against gold, the risk of default stays in control for the lenders.
This change improves overall access and makes gold loans the first choice in case of emergency finance.
3. New Tenure Restrictions on Bullet Repayment Loans
Bullet repayment loans are loans where borrowers pay the principal and interest together at the time of maturity. As per the new RBI rules on gold loans, the tenure for bullet repayment loans has been set to 12 months. Hence, now, borrowers need to repay the loan in one year. This avoids delay in repayments and also reduces the interest that borrowers need to pay.
4. Limits on Gold and Silver Pledges
RBI has restricted the quantity of gold and silver that a borrower can pledge. Here are the new limits according to the RBI new rules for gold loans:
- Gold ornaments: 1 kg
- Gold coins: 50 grams
- Silver ornaments: 10 kg
- Silver coins: 500 grams
These limits apply to all borrowers in relation to all the branches of the lending bank.
5. Faster Return of Gold Post-Repayment
There have been a lot of complaints from borrowers about the delayed return of pledged jewellery. But according to the new system:
- Lenders are required to return gold or silver on the same day a loan is repaid, or within seven working days.
- In case of delay, they are required to pay compensation to the borrowers at ₹5,000 per day.
This provision under the new RBI rules for gold loans encourages lenders to approach pledged assets with seriousness and earnestness.
6. Mandatory Compensation for Loss or Damage
If pledged property is lost or damaged in custody for audit or storage, the lender is now obligated to compensate the borrower completely. This solves one of the largest problems of borrowers: the safety of their assets. This increases borrower confidence and encourages lenders to strengthen storage and audit mechanisms.
7. Clear Auction Procedures
When a borrower defaults on the payment, lenders previously auctioned the pledged gold. This is why borrowers complained about a lack of transparency. The new reforms enhance transparency:
- Prior notice has to be provided to the borrowers.
- The minimum reserve price of gold should not be less than 90% of the prevailing market price (it can decrease to 85% after two unsuccessful auctions).
- Any surplus from the auction has to be repaid within seven working days.
These new RBI rules for gold loans protect gold loan borrowers from undervaluation or arbitrary auction.
8. Language Communication of Borrowers
Lenders are now required to communicate loan terms, valuation reports, and repayment details in the borrower's local or preferred language. Borrowers who are illiterate have to be read out before a witness. This avoids any confusion, increases financial literacy, and makes the borrowers well-informed of the loan terms.
When Will These New RBI Rules for Gold Loans Come into Effect?
These new rules will come into effect on 1 April 2026. Moreover, all loans sanctioned from this date onwards will adhere to the new regime. Loans that were provided previously will remain under the previous norms.
How Will These New RBI Rules for Gold Loans Affect Borrowers?
These new RBI rules for gold loans will provide several advantages that have a direct positive impact on the borrowing process. Here's how:
- Increased borrowing power with higher LTV: Due to the new 85% LTV limit for small-ticket loans, borrowers can now use the same amount of gold to get much higher loan amounts. This is particularly helpful in emergencies when quick access to money is required.
- Faster access for low-ticket loans: By removing the need for advanced credit appraisals in loans up to ₹2.5 lakh, the RBI has solved a major barrier. Borrowers who might not have formal income proofs and credit profiles can still have access to funds.
- Quicker release of gold pledged upon repayment: The strict 7-day asset release timeline, along with a ₹5,000 penalty for delayed release, will make sure that borrowers get their pledged assets in a timely manner.
- Prevention from mismanagement or undervaluation: With the new guidelines of giving compensation for damaged or lost jewellery, borrowers can feel safe and confident pledging their assets as security.
The new RBI rules for gold loans not only make gold loans secure and accessible but also establish a system whereby borrowers are protected. With more transparency and accountability, gold loans turn into a healthy financial means instead of a recourse option.
RBI's Role in Regulating Gold Loan Activities
Reserve Bank of India (RBI) is the central authority that regulates the activities of gold loans in the country. As gold loans constitute a considerable portion of retail lending, the RBI regulates the market to ensure it is fair, transparent, and stable.
The RBI provides binding guidelines to banks, Non-Banking Financial Companies (NBFCs), and co-operative institutions that practice gold-backed lending. The key role of RBI in Gold Loan activities is as follows:
- Setting Loan-to-Value (LTV) Ratio: RBI sets the cap on Loan-to-Value (LTV) Ratio to avoid over-leveraging against gold collateral.
- Setting Valuation Standards: RBI sets valuation standards to ensure proper and fair valuation of gold jewellery pledged by the borrowers.
- Transparency: Mandates the interest rates to ensure the borrowers know the true cost of borrowing.
- Protecting Borrowers' Interest: Ensuring the interests of the borrowers by means of fair practices codes and grievance redressal systems.
To Conclude
The new RBI rules for gold loans increase LTVs of gold loans, limit the tenures of bullet repayment loans, and ensure that borrowers and their pledged assets are safe. With these new guidelines, gold loans have become secure, faster, and more reliable. For borrowers, the regulations lead to greater security and much better value for their possessions.
If you're looking for a hassle-free Gold Loan, Poonawalla Fincorp is a reliable partner. We offer gold loans of up to ₹50 lakh at affordable interest rates with complete safety and security of your gold belongings. Why wait? Apply for gold loan with Poonawalla Fincorp now!
FAQs about RBI Rules for Gold Loan
When will the new RBI Gold Loan rules come into effect?
The new RBI Gold Loan rules will apply from 1 April 2026 to all fresh loans disbursed after this date.
What happens if a lender delays returning my gold after repayment?
If your lender delays, they must pay you ₹5,000 per day as compensation until your gold is returned.
Can I pledge more than 1 kg of gold ornaments with multiple lenders?
No, the 1 kg cap applies per borrower across all lenders and their branches.
What is the new maximum tenure for bullet repayment gold loans?
Bullet repayment loans now have a maximum tenure of 12 months under the RBI's 2025 guidelines.
Will the higher 85% Loan-to-Value ratio apply to all gold loans?
No, the 85% LTV is only for loans up to ₹2.5 lakh. For higher amounts, the earlier 75% cap applies.
We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
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