Unlock Instant Funds: RBI Makes Small Gold Loans Simpler and Smarter

Updated: June 07, 2025 09:54

Image Source: Mint

The Reserve Bank of India has clarified that small gold loans—those up to ₹2.5 lakh—will now be even easier to access, with no credit appraisal required. This move is expected to benefit lower-income borrowers and anyone seeking quick, hassle-free funding by leveraging their gold assets.

No Credit Appraisal Needed:

For gold loans up to ₹2.5 lakh, banks and NBFCs will not require a credit appraisal. This means borrowers don’t need to worry about their credit history or income proof, making it much simpler for people with limited or irregular income to access funds quickly.

Faster and Simpler Process:

Since the loan is secured by gold, lenders can approve and disburse funds within hours, often with just basic ID and address proof. This is especially helpful in emergencies or for urgent financial needs.

Lower Interest Rates and Flexible Repayment:

Gold loans typically come with lower interest rates than unsecured loans. Borrowers can choose from various repayment options, including bullet payments, EMIs, or interest-only payments, making it easier to manage repayments according to their cash flow.

Higher Loan-to-Value (LTV) Ratio:

The RBI has proposed raising the LTV ratio for small gold loans to 85%, which means borrowers can get more value for their pledged gold.

No Impact from Poor Credit History:

Approval is based on the gold’s value and purity, not the borrower’s credit score. This makes gold loans accessible to those with low or no credit history, such as homemakers, farmers, or small business owners.

Safe Storage and Minimal Fees:

Lenders store the pledged gold securely, and most charge minimal processing fees. Borrowers can also foreclose or renew their loans easily without heavy penalties.

No End-Use Restrictions:

Borrowers are free to use the funds for any purpose—be it business, education, medical emergencies, or personal needs.

This regulatory change is expected to make small-ticket gold loans a go-to option for quick, affordable, and accessible credit, especially for those who may not qualify for traditional loans.

Source: Times of India, The Hindu BusinessLine, Shriram Finance, Ujjivan SFB, Muthoot Finance, Bank of Baroda

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