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RBI’s New Gold Loan Rules from Jan 2026: What They Mean for You

Written by: Kusum KumariUpdated on: Jun 3, 2025, 11:38 AM IST
RBI’s draft gold loan rules limit LTV to 75%, ban loans against bars, and cap pledge limits. The government wants loans under ₹2L to be exempt.
RBI’s New Gold Loan Rules from Jan 2026: What They Mean for You
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The Reserve Bank of India (RBI) is tightening gold loan norms due to the surge in gold prices and a rise in unpaid gold loans (NPAs). Gold loans are popular in India for quick cash, but many borrowers have defaulted, affecting both banks and NBFCs. NPAs from gold loans rose sharply in 2024—₹2,040 crore for banks and ₹4,784 crore for NBFCs.

Govt Suggests Relaxation for Small Borrowers

After concerns from Tamil Nadu CM MK Stalin, the Finance Ministry suggested that loans below ₹2 lakh be exempt from the stricter rules. It also proposed that the new rules apply from January 1, 2026, to give lenders time to adjust.

Key Changes in RBI’s Draft Guidelines

1. Loan-to-Value (LTV) Limit

  • Maximum LTV is 75%.
  • LTV = Loan amount ÷ Gold value.

2. Acceptable Collateral

  • Loans are allowed only against gold jewellery and bank-issued gold coins.
  • No loans against gold bars, bullion, or ingots.

3. Gold Valuation Rules

  • Gold must be valued as 22-carat equivalent.
  • Only trained assayers can assess gold in the borrower's presence.
  • Gold prices used should be the lower of:
    • Last 30-day average, or
    • Previous day’s closing price (from IBJA or SEBI-recognised exchange).

4. Loan Against Silver

  • Silver must be valued at 999 purity market rates.

5. Ownership Proof

  • Borrowers must prove ownership.
  • If no bill, a declaration of ownership is needed.

6. Purpose-Based Conditions

  • For income-generating loans, lenders must monitor usage.
  • Bullet loans (where everything is due at maturity) are limited to 12 months.
  • One piece of gold cannot be used for both income and consumption loans.

7. Pledging Limits

  • Max gold: 1 kg per borrower.
  • Max gold coins: 50 g.
  • Max silver coins: 500 g.

8. No Reuse of Collateral

  • Gold pledged once can't be reused until the previous loan is fully repaid.

Read More, Best Gold Stocks in India for June 2025: Titan, Sky Gold, and More Based on 5Y CAGR

Conclusion

The RBI's draft gold loan rules aim to reduce risk for lenders and borrowers, improve transparency, and prevent misuse. While helpful for the financial system, the stricter rules could hurt small borrowers, prompting the government to recommend a ₹2 lakh exemption. If approved, the new norms will apply from January 2026.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Published on: Jun 3, 2025, 11:38 AM IST

Kusum Kumari

Kusum Kumari is a Content Writer with 4 years of experience in simplifying financial market concepts. Currently crafting insightful content at Angel One, She specialise in breaking down complex topics into easy-to-understand pieces, blending expertise in market fundamentals and technical analysis.

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