RBI’s New Gold Loan Rules 2025: Key Changes, Limits & Guidelines

In recent years, the RBI has introduced several gold loan new rules to regulate the gold loan sector more effectively and advise people on how gold loans work. These RBI gold loan rules, effective from 2025, introduce new provisions, directions, and restrictions aimed at enhancing consumer protection.

Key Highlights:

The RBI gold loan rules 2025 are introduced for transparency and security for both lenders and borrowers. The highlights are as follows:

1. Reduced LTV ratios:  LTV capped at 75% for standard gold loans.
2. Reduced excessive borrowing: The maximum aggregate weight of ornaments pledged is capped at 1 kg.
3. Prompt release of collateral: Gold pledged must be returned within 7 working days.

What is a Gold Loan?

A gold loan is a collateral loan in which the borrower's gold jewellery or gold coins are used as security to avail a loan. It is an instant and easy source of finance, particularly for individuals who require immediate cash but lack access to bank credit. 

Gold loans are provided by banks, Non-Banking Financial Companies (NBFCs), and private financiers. Gold loans are popular for their low processing time, simple documentation, and quick disbursement. 

However, like any loan, they come with risks, especially if borrowers cannot repay on time, which can lead to the potential loss of the pledged gold.

How Does a Gold Loan Work?

The gold loan process typically involves the following steps:

Step 1: Borrowers must pledge their gold jewellery or coins to the lender.

Step 2: The lender values the gold at the applicable market price and approves the maximum loan amount.

Step 3: The loan amount is disbursed to the borrower after agreeing to the terms and conditions.

Step 4: The borrower repays the loan in agreed-upon instalments. The gold is returned to the borrower if the loan is repaid in full.

Step 5: In the event of non-repayment, the lender can sell the pledged gold to cover the loan amount.

Key Changes in RBI Gold Loan Rules 2025

Let's discuss the most important RBI new rules for gold loans:

Changes to Loan-to-Value (LTV) Ratios

The LTV ratio underlines the amount that could be lent against the market value of the gold pledged. The RBI gold loan rules 2025 favour a more conservative stance on the LTV ratios by lowering the maximum limit of high-value gold loans, which means that one can now take a relatively lesser loan against the gold value than in previous years.

• The LTV ratio has been reduced to 75% for standard gold loans for loans above ₹5 lakhs.
• For smaller loans of up to ₹2.5 lakh, the new rules allow a higher LTV ratio of up to 85%, giving borrowers access to more money without putting up too much collateral.

Proof of Ownership for Gold Collateral

Borrowers are now required to provide verifiable proof that they own the gold being pledged as collateral. This establishes the rightful ownership of gold used in securing loans by the borrowers. Proofs accepted as Gold collateral include:

• Original purchase receipts.
• In cases where receipts are unavailable, a declaration or document from the borrower explaining the ownership of the gold.

Gold Purity Certification

Banks and financial institutions are now required to provide a Gold Purity Certificate for the gold pledged. This ensures transparency and clarity for both the borrower and lender regarding the exact value and quality of the collateral. Details in the Certificate should include:

• Specification of the carat purity (e.g., 22-carat).
• The gross weight of the pledged gold.
• Deductions for stones or other materials in the gold.
• The final value of the pledged gold based on its purity and weight.

Eligible Gold Forms for Collateral

Eligible forms of gold for loan collateral include:

Types of Eligible Gold:

• Gold Jewellery: Ornaments such as chains, bangles, rings, etc., can be pledged.
• Gold Coins: Only special 22-carat gold coins minted and sold by banks are acceptable as collateral. These coins must meet specific purity standards.

Exclusion of Gold Forms:

• Raw gold or bullion (gold bars, biscuits, ingots or any other unfinished gold form) is not eligible.
• Gold-backed financial products (Gold ETFs or gold mutual fund units) are not eligible.

Loans Against Silver

For the first time, loans are issued against silver. This opens up a new avenue for those holding silver assets to avail loans using their silver holdings as collateral. 

Types of Eligible Silver:

• Silver Jewellery: Silver jewellery and ornaments can be pledged.
• Silver Coins: Specially minted silver coins with a minimum purity of at least 925 (sterling silver).

Exclusion of Silver Forms:

• Raw silver or bullion (silver bars, biscuits, or slabs) is not eligible.
• Silver-backed financial products (Silver ETF units) are not eligible.

Comprehensive Loan Agreements

Banks will provide a comprehensive loan agreement containing the following details:

• The loan agreement must include a full description of the pledged gold.
• Clear information on how the loan will be repaid, including interest rates, fees, and penalties for late payments.
• Specific procedures in case of borrower’s default, including auction procedures and timelines for selling the gold collateral if needed.
• The agreement must specify the timeline for returning the gold after the loan is fully repaid, which is typically within 7 days.
• Full disclosure of all fees or charges, including service charges, processing fees and any potential penalties for late repayment.

Gold Loan Limit

The new gold loan limits have been introduced to reduce excessive borrowing. Borrowers are allowed to pledge up to 1 kg of gold ornaments and up to 50 grams of gold coins per borrower.

Release of Gold Collateral

Once the borrower repays the entire loan amount, the gold must be returned within 7 working days. If the gold is not returned within the specified time frame, the lender will have to pay the borrower a penalty of ₹5,000 per day till the release date.

This provision ensures that the borrower’s gold collateral is promptly returned after the loan is cleared, and helps protect against undue delays in the loan closure process.

New Gold Loan Rules Effective Date

The RBI announced the new rules for gold loans, which came into force in April 2025. The RBI has provided a transition period to the lenders to comply with these new rules so that they may alter their processes.

Impact of New Gold Loan Rules for Users

The gold loan users are now being given extra protection with the new rules relating to gold loans issued by the  RBI in view of enhanced financial transparency and the reduction of risk on both sides. Let us discuss how it affects the borrowers:

Greater Loan Security

• Normally, LTV for gold loans is kept under stricter regulations, protecting borrowers from borrowing more than they can truly repay. 
• Hence, these new limits will stop over-pledging of gold and prevent them from losing their precious assets.

Reduced Risk of Over-indebtedness

• By lowering the LTV for larger loans and limiting the amount one can borrow, the new rules aim to protect borrowers from over-indebtedness. 
• Borrowers are encouraged to take only as much as they can repay within the agreed timeline.

Increased Transparency

• With LTV ratios fixed by the RBI and restrictions on gold loan limits, these new rules will ensure the transparent operation of the gold loan field, thereby checking exploitative lending.
• The requirement of a purity certificate and the detailed gold loan agreement will help you know the exact status of your gold loan.

Impact on Interest Rates

• The new rules may reduce the interest rates for gold loans, as more regulated guidelines increase competition among lenders to offer affordable gold loan products. 
• However, this remains to be seen in the coming months.

Steps to Apply for a Gold Loan Under the New Rules

Applying for a gold loan under the RBI's new rules is a simple process. Here's how you can apply:

Step 1: Compare offers from banks, NBFCs, and other financial institutions that offer gold loans.

Step 2: Ensure the lender is adhering to the updated LTV ratios of 75% (or 85% for smaller loans).

Step 3: In addition to the gold, you must provide proof of income, identity proof (e.g., Aadhar), and proof of address.

Step 4: Ensure you understand the interest rate, repayment tenure, and any additional fees or penalties.

Step 5: Once your application is processed, the loan is disbursed through a cheque or direct bank transfer.

Gold loans restructured in accordance with RBI guidelines are aimed at protecting gold loans and making them borrower-friendly. By implementing LTV restrictions and gold loan values, the RBI intends to ensure that people are not exploited. In 2025, these changes will create an atmosphere of equity, allowing borrowers to obtain an instant loan without risking their valuable assets.

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