Gold and silver loan regulations to see an overhaul, according to the Reserve Bank of India. The new framework introduces borrower-friendly reforms. It was released on June 6. This framework also tightens conduct rules for lenders.
There are eight changes that will affect all commercial banks, NBFC's, cooperative banks, housing finance companies and those taking loans against gold and silver jewellery, ornaments or coins.
Upto 85% of the gold value as a loan is available, up from 75%. Including interest, the new Loan-to-Value cap applies to total loan amounts up to ₹2.5 lakh. If the gold is worth ₹1 lakh, one can borrow ₹85,000 instead of ₹75,000 which was the earlier rate.
For gold loans below ₹2.5 lakh, lenders will not require detailed income assessment or credit checks.Low-income and rural borrowers will be able to access it.
Bullet repayment is where interest and principal are paid together at the end. Consumption loans with bullet repayment must now be repaid within 12 months.
Borrowers can pledge Gold ornaments up to 1 kg, Gold coins up to 50 grams, Silver ornaments up to 10 kg, Silver coins up to 500 grams. These apply across all branches of a lender and are per borrower.
The pledged gold or silver must be returned within 7 working days, or on the same day of loan closure. ₹5,000 per day to the borrower must be paid as compensation if there is a delay.
During audits or return, if the pledged gold or silver is lost or found damaged, full compensation to the borrowers is a must.
In case of loan defaults, within 7 working days surplus from auction must be returned to the borrower. Before auctioning gold, lenders should give proper notice. The reserve price must be at least 90% of market value(85% after two failed auctions).
In front of an independent witness, illiterate borrowers must be informed. In the borrower's preferred or regional language, loan terms and valuation details must be shared.
The central bank aims to bring uniformity, transparency, and borrower protection into the gold loan segment with the new norms. From April 1, 2026, the new framework will take effect. Loans issued before this date will follow earlier norms.
