RBI Gold Loan Rules 2026: New LTV Limits, Silver Loan Eligibility & Key Changes Explained

The Reserve Bank of India (RBI) has issued the Lending Against Gold and Silver Collateral Directions, 2025, introducing a harmonised framework for gold and silver-backed lending across banks, co-operative banks, and NBFCs. The directions were issued in June 2025 and were required to be implemented by regulated entities by 1 April 2026. This framework aims to standardise lending practices, strengthen borrower protection, and improve transparency across the sector. 

Notably, gold-backed loans are growing exponentially in India and are poised to become the country’s largest retail non-housing loan category. As per the RBI’s latest Financial Stability Report, the segment’s credit growth has recorded a compound annual growth rate (CAGR) of 42.4% since March 2024. Hence, the RBI wants to strike a balance between promoting and regulating India’s Gold Loan business. 

Gold Loan Rules by RBI for Lenders and Jewellers: Key Changes

The new RBI directions incorporate various provisions on credit assessment, collateral management, loan valuation, and recovery procedures. Here are the key highlights: 

Larger Gold Loans Now Require Credit Assessment 

The RBI has decided to allow flexibilities for standard gold loans with smaller ticket sizes. However, any Gold Loan worth more than ₹2.5 Lakh now requires an underwriting assessment by the lender to determine the borrower’s repayment capacity. This change is intended to ensure responsible lending policies for higher-value loans while allowing for easy access to small-value gold loans. 

Loan-to-Value Ratios Have Become Tiered

According to the RBI's Lending Against Gold and Silver Collateral Directions, 2025, lenders must follow a tiered Loan-to-Value (LTV) structure based on the total loan amount, replacing the earlier uniform approach followed by many lenders.  

Previously, a uniform LTV cap applied across all gold loans. Under the new RBI guidelines, however, a tiered LTV structure has been introduced. 

The revised framework aims to give more freedom to small borrowers and reduce risks associated with large-value loans. Note that lenders need to ensure that LTV (loan-to-value) ratios are maintained throughout the tenure of the loan and not just at the time of sanctioning the loan.

 Renewals and Top-Ups Now Have Strict Conditions 

RBI has made several changes to norms governing loan renewals and top-ups. As per the new framework, loan top-ups and renewals can only happen upon request. Further, the renewal of a loan can be considered by the lender only if: 

• The loan is a standard asset, 
• Exposure is within the LTV limits, and 
• Interest that is due has been paid in the case of bullet repayment loans. 

Although bullet repayment loans are still allowed, their tenure is now restricted to a maximum of 12 months under the RBI's revised framework.

Gold and Silver Collateral Rules Have Been Standardised

As per the revised directions, loans cannot be offered against primary bullion or financial assets backed by gold or silver, like gold ETFs or silver ETFs and mutual funds investing in these assets. 

Besides this, the lending institution has to ensure that the gold ornaments, gold coins, silver ornaments, and silver coins pledged as collateral actually belong to the borrower. Here are the caps in terms of weight for gold and silver ornaments and coins as per the revised norms: 

• Gold ornaments: Up to 1 kilogram per borrower 
• Gold coins: Up to 50 grams per borrower 
• Silver ornaments: Up to 10 kilograms per borrower 
• Silver coins: Up to 500 grams per borrower 

Additionally, the updated framework widens the scope of accepted collateral for borrowers and makes silver's treatment closer to that of gold by allowing suitable loans against silver collateral. 

Valuation Practices Must Follow Uniform Standards

The RBI has stated that a standardised assaying and evaluation process must be followed by all lending branches. Now lenders are required to: all lending branches must follow a standardised assaying and evaluation process 

• Conduct the assaying process in the presence of the borrower. 
• Determine the collateral value based solely on the intrinsic value of the precious metal. 
• Clearly disclose deductions made for stones, lac, or other non-metal components. 
• Publish their valuation methodology on their official website. 

Industry organisations such as the India Bullion and Jewellers Association (IBJA) continue to have a strong position in providing benchmark gold and silver pricing throughout the industry. 

According to the RBI, evaluation for qualifying collateral must be done at a minimum of the previous day’s closing price or the 30-day average closing price provided by a recognised source. 

Stricter Rules for Collateral Handling and Storage 

The new directions have placed greater emphasis on control mechanisms and processes for collateral management. Gold and silver collateral can only be kept in branches with reliable vaults. Moreover, access to such vaults should be limited to authorised personnel only. Additionally, the lenders are supposed to perform regular audits and surprise inspections. 

RBI has clarified that the borrower should be compensated for any loss/damage detected during inspections or when the collateral is released. 

New Rules for Collateral Release and Auction

Lenders must return the collateral either on the day of the repayment or, at the latest, within 7 working days. Furthermore, the lenders must pay a compensation of ₹5,000 per day to the borrowers if delays are on the lender’s side. 

Additionally, the auction process of pledged collateral has become more transparent. The lenders must give sufficient notice to bidders before holding an auction. Moreover, the reserve price during auctions should not be lower than 90% of the value of collateral. The reserve price can be lowered to 85% if the auction fails twice. 

Why Do These Changes Matter? 

The new directions to the lenders and borrowers of gold loans aim to: 

• Increase transparency during the valuation process 
• Enhance the level of protection for lenders and borrowers 
• Reduce the operational risks 
• Standardise the processes of gold/silver lending and recovery 
• Encourage responsible borrowing and lending 

For jewellers and NBFCs, these changes may require transformation in their processes, technology, and staff training. For borrowers, the changes mean having a clear understanding of their rights and responsibilities when pledging gold and silver assets to obtain loans. 

To Conclude

The new RBI directions on gold and silver collateral for loans represent one of the most significant regulatory updates to lending practices in recent years. The revised Loan-to-Value (LTV) ratios, enhanced collateral valuation norms, and greater emphasis on transparency are expected to strengthen the gold and silver loan ecosystem. 

Since April 2026, regulated lenders such as banks and NBFCs have been operating under a clearer framework for gold and silver collateral-backed lending. Borrowers also benefit from greater transparency and more protection throughout the loan lifecycle. 

Looking for a reliable lender for your financing needs? Opt for a Gold Loan from Poonawalla Fincorp for a smooth borrowing process. Apply now! 

Source: This article is based on the Reserve Bank of India's Lending Against Gold and Silver Collateral Directions, 2025 and publicly available guidance relating to gold and silver-backed lending in India 

FAQs

Are banks and NBFCs subject to the new RBI regulations? 

Yes, banks, cooperative banks, and NBFCs that provide loans for gold and silver are covered under the updated framework. 

Does the new RBI framework allow me to utilise silver as collateral for a loan? 

According to RBI regulations, it is now possible to pledge silver coins and ornaments as collateral. 

Do lenders need to check who owns the gold or silver that has been pledged? 

Yes, before approving the loan, lenders must confirm that the borrower owns the pledged gold or silver. 

What occurs if my pledged collateral is not promptly returned by a lender? 

For such delays, the lender would have to reimburse you in accordance with the RBI's established guidelines. 

Are all current gold loans impacted by the updated RBI guidelines? 

The updated guidelines are applicable in accordance with the RBI's implementation schedule and the relevant regulations of the lender. 

What is the maximum LTV under RBI gold loan rules? 

Borrowers can get up to 85% LTV for gold loans up to ₹2.5 lakh. 

Can I pledge silver for a loan?  

Yes, eligible silver ornaments and coins can now be used as collateral.