RBI Tightens Gold Loan Regulations to Ensure Safety and Transparency

The Reserve Bank of India (RBI) has revised its guidelines for loans against gold, increasing the loan-to-value ratio to 85% for loans under Rs 2.5 lakh. The new rules aim to enhance safety and transparency in the lending process, ensuring ownership and monitoring end-use of loans.

The Reserve Bank of India (RBI) has announced a revision in its guidelines regarding loans against gold, raising the loan-to-value (LTV) ratio to 85% for borrowings under Rs 2.5 lakh. Previously set at 75%, the updated ratio aims to regulate this loan category more effectively, minimizing associated risks.

For loans between Rs 2.5 lakh and Rs 5 lakh, the LTV has been fixed at 80%, and above Rs 5 lakh, it remains at 75%, according to the RBI Directions, 2025. The guidelines also require lenders to verify the ownership of collateral and prohibit extending loans against primary gold or financial assets backed by gold.

RBI Governor Sanjay Malhotra emphasized the importance of the new regulations in ensuring clarity over ownership and reducing the need for credit appraisal for small loans. The rules are to be implemented no later than April 1, 2026, with existing loans following current guidelines until then.