RBI's Gold Loan Policy Shake-Up: A New Era for Lenders

The RBI's new gold lending rules are set to reshape India's lending sector. Increasing the loan-to-value ratio requires lenders to adjust their business models, emphasizing operational agility and service excellence. S&P Global Ratings highlights that NBFCs must enhance risk management regarding income and cash flow evaluations.

The Reserve Bank of India's new regulations on gold-backed loans are poised to alter the competitive scene for lenders, according to S&P Global Ratings.

The changes, effective from April 1, 2026, include a hike in the loan-to-value ratio up to 85% for smaller loans under Rs 2.5 lakh, with varying ratios for larger borrowings.

To adapt, non-banking financial corporations (NBFCs) must refine their risk management strategies, shifting focus from collateral valuation to assessing borrowers' repayment abilities via income and cash flow analyses.