Gold Loan

The Reserve Bank of India (RBI) has introduced significant changes to the regulatory framework governing gold-backed loans, aiming to enhance the safety and transparency of the sector. The new Loan-to-Value (LTV) ratio guidelines, effective from April 2026, increase the LTV for loans under Rs 2.5 lakh, and introduce restrictions on the type and quantity of gold or silver pledged as collateral. These changes also reinforce the need for better documentation of ownership and closer scrutiny of loans under anti-money laundering (AML) regulations.

The Department of Financial Services (DFS), under the Ministry of Finance, has submitted feedback to the Reserve Bank of India (RBI) on its draft guidelines for lending against gold collateral. Key suggestions include exempting small-ticket borrowers, those taking loans under ₹2 lakh, from new requirements and proposing a delay in the implementation of the guidelines until January 2026. These recommendations come in response to identified irregularities in gold loan disbursement practices and aim to protect small borrowers while ensuring operational adjustments for lenders.