What are the latest regulations for Gold Loan in India?

 RBI – Lending Against Gold and Silver Collateral Directions, 2025

The document consolidates and harmonizes all RBI regulations on loans against gold and silver collateral for banks, NBFCs, and co-operative institutions. It lays down a principle-based, uniform framework to ensure prudence, transparency, and consumer protection.

1. Purpose and Scope

  • Aims to provide borrowers short-term liquidity by pledging idle gold/silver while safeguarding lenders from risk.

  • Applicable to commercial banks (except payment banks), co-operative banks (UCBs, RCBs), and all NBFCs including housing finance companies.

  • Covers both consumption loans (personal use) and income-generating loans (business/farm credit) where gold/silver ornaments or coins are pledged.

2. Key Definitions

  • Eligible Collateral: Jewellery, ornaments, or coins of gold/silver (not primary bullion).

  • Bullet Repayment Loan: Principal + interest payable at maturity.

  • Top-up Loan: Additional loan sanctioned during existing loan’s tenure against same collateral.

  • Loan-to-Value (LTV) Ratio: Loan amount as % of collateral value.

3. General Conditions

  • Lenders must have a formal credit policy defining borrower limits, LTV ratios, valuation standards, and documentation.

  • Detailed credit assessment is required for loans above ₹2.5 lakh.

  • Renewal or top-up loans allowed only if within permissible LTV and after interest is cleared.

  • No lending against primary gold/silver, ETFs, or MF units.

  • Borrower must declare rightful ownership of collateral to prevent fraud/AML violations.

  • Tenure of bullet repayment consumption loans capped at 12 months (renewable).

4. Valuation and LTV

  • Collateral must be valued based on purity-adjusted reference prices (lower of last day’s closing price or 30-day average) published by IBJA or SEBI-recognized exchanges.

  • Only intrinsic metal value considered (stones, fastenings excluded).

  • Max LTV Ratios:

    • Up to ₹2.5 lakh – 85%

    • ₹2.5–5 lakh – 80%

    • Above ₹5 lakh – 75%

5. Conduct and Standardisation

  • Assaying procedures must be standardized across branches.

  • Borrower must be present during assaying; deductions and purity recorded in a certificate with image of collateral.

  • All documents and communications must be standardized and provided in the borrower’s chosen/regional language.

6. Collateral Management

  • Collateral must be handled and stored securely in branch vaults with trained staff.

  • Periodic internal audits and surprise verifications mandated.

  • Release of collateral within 7 working days of repayment.

  • Auction procedures must be transparent, publicly advertised, and first held in same district. Reserve price ≥ 90% of current value (can reduce to 85% after two failed auctions).

  • Surplus from auctions must be refunded within 7 working days.

7. Compensation & Consumer Protection

  • Lenders must bear cost of repair if collateral is damaged.

  • Compensation for loss/deterioration of collateral during loan period.

  • Delay in releasing collateral (lender’s fault) attracts ₹5,000 per day compensation.

  • Periodic reminders for unclaimed collateral; unclaimed items after 2 years must be reported to the board.

8. Other Instructions

  • Misleading advertisements prohibited.

  • Loans should generally be disbursed to borrower’s own bank account.

  • KYC/AML compliance mandatory.

  • Multiple loans to same borrower subject to stricter internal audit.

9. Disclosures & Repeal

  • Lenders must disclose gold/silver loan portfolio details (LTV, NPAs, auctions, recoveries) in notes to accounts as per Annex 1 format.

  • Annex 2 lists 30+ earlier RBI circulars that stand repealed with this direction.

Overall:
This document creates a uniform, transparent, and borrower-friendly gold loan framework, focusing on fair valuation, standard processes, collateral safety, responsible lending, and timely customer redressal.

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