RBI Eases Gold Loan Rules: LTV Raised to 85% for Loans Under Rs 2.5 Lakh

Image Source: Times Now

The Reserve Bank of India (RBI) has announced a significant change to gold loan regulations, raising the loan-to-value (LTV) ratio for loans up to Rs 2.5 lakh to 85%. This move is set to make it easier for small borrowers to access funds against their gold, while also introducing tighter controls for larger loans.

Key Highlights:

Starting April 1, 2026, borrowers can get up to 85% of their gold’s value as a loan for amounts up to Rs 2.5 lakh, up from the previous 75% cap.
For gold loans between Rs 2.5 lakh and Rs 5 lakh, the LTV ratio will be 80%. For loans above Rs 5 lakh, the limit remains at 75%.
The new rules are aimed at helping households and small businesses by improving access to credit and reducing procedural hurdles.
Credit appraisal requirements will be relaxed for small-ticket gold loans, making the process faster and less cumbersome for borrowers.
End-use monitoring will only be required if the loan qualifies under Priority Sector Lending norms.

Borrowers will only need to declare ownership of the pledged gold or silver, removing the need for formal ownership records for small loans.

The RBI’s decision comes after feedback from the Ministry of Finance and stakeholders, who raised concerns about the impact of stricter rules on small borrowers.

The guidelines also include stricter valuation and monitoring for lenders to address risks and ensure transparency in the gold loan segment.

This change is expected to boost credit flow to small borrowers, especially households and micro-entrepreneurs, while keeping a close watch on risk and compliance.

Source: Business Standard, Indian Express, Times of India