In a major policy shift that could boost liquidity for millions of borrowers across India, the Reserve Bank of India (RBI) has officially updated the gold loan-to-value (LTV) ratio for small-ticket loans up to ₹2.5 lakh to a maximum of 85%, although some headlines mistakenly cited a return to 90%. The new norms were released under the RBI (Lending Against Gold and Silver Collateral) Directions, 2025, and will be effective from April 1, 2026.
Contrary to COVID-era measures that temporarily allowed 90% LTV (expired in March 2021), this update adopts a permanent, structured tiered system to regulate lending against gold.
Official Notification: RBI Lending Against Gold and Silver Collateral Directions, 2025 (PDF)
Who Will Be Affected?
This change directly impacts:
- Borrowers seeking small-ticket today gold loan options from lenders such as Muthoot Finance, IIFL, and Bajaj Finserv
- Agricultural and MSME borrowers in rural and semi-urban India
- Customers using public sector services like SBI Gold Loan, Canara Bank Gold Loan, and PNB Digi Gold Loan
The update also benefits borrowers using digital tools such as gold loan calculator, loan calculator, and checking daily gold loan per gram values based on prevailing gold rate and gold price.
When Is This Rule Effective?
The final directions were issued on June 6, 2025, and RBI has mandated full enforcement from April 1, 2026. This allows financial institutions time to align their systems with the new regulatory framework.
Where Will It Apply?
The rule will be enforced nationwide across:
- Scheduled Commercial Banks
- Regional Rural Banks (RRBs)
- Cooperative Banks and Housing Finance Institutions
- Non-Banking Financial Companies (NBFCs) like Muthoot, Manappuram, Chola, and Bajaj Finserv
Why Did RBI Introduce This Rule?
The RBI’s goal is to formalize and streamline access to secured loans, especially for low-income borrowers who rely heavily on physical gold as collateral. With gold prices hovering between ₹96,000–₹98,000 per 10 grams, the new norms ensure:
- Wider financial inclusion
- Reduced reliance on informal moneylenders
- Transparent valuation and repayment practices
- Protection of borrower rights
Increased LTV will also ease liquidity stress among micro-entrepreneurs, households, and farmers during emergencies or seasonal expenses.
How Will Borrowers Benefit?
Borrowers pledging gold will now be eligible for up to 85% of the gold’s value, significantly higher than the prior 75% for small-ticket loans.
Example:
If today's gold rate is ₹9,700 per gram, and you pledge 10g (worth ₹97,000), you are now eligible for:
- ₹82,450 under the new 85% LTV
- Compared to ₹72,750 under the older 75% limit
This is a major advantage for those applying for short-term loans through platforms like Muthoot Gold Loan, SBI Gold Loan, or IIFL Gold Loan.
Key Highlights of RBI's New Gold Loan Rules (2025)
| Feature | Description |
|---|---|
| LTV Ratio | 85% for ≤ ₹2.5 lakh, 80% for ₹2.5–5 lakh, 75% above ₹5 lakh |
| Loan Type | Bullet repayment loans must calculate LTV on total repayable (principal + interest) |
| Collateral Accepted | Only 22-carat jewellery and bank-minted coins (up to 1kg + 50g) |
| Assaying & Valuation | Done in the borrower’s presence by BIS-certified agents |
| Gold Return Policy | Same-day or within 7 working days post repayment; ₹5,000/day penalty beyond that |
| Auction Rules | Reserve price ≥ 90% (first auction), ≥ 85% (resale); lenders or affiliates cannot bid |
| Documentation | Receipt or signed declaration required for ownership proof |
| Simplified Lending | No credit appraisal needed for loans up to ₹2.5 lakh |
Final Thoughts
For millions of Indians, gold remains more than just an ornament—it's an economic safety net. With the RBI’s updated guidelines, access to that safety net becomes more secure, transparent, and empowering.
Borrowers should:
- Compare today gold loan rates across lenders
- Monitor the gold rate today to pledge at optimal value
- Use tools like gold loan calculator and bank EMI estimators
- Understand the revised gold loan interest slabs across SBI, Muthoot, IIFL, and Canara Bank
This policy is a significant step toward making secured credit more accessible, formalized, and fair—especially for the underserved sectors of the Indian economy.
