RBI Issues Unified Gold Loan Regulations – What Borrowers and Lenders Must Know

The Reserve Bank of India (RBI) has released the "Lending Against Gold and Silver Ornaments and Jewellery Directions, 2025" which in a massive way is going to impact the borrowers and the lenders. These guidelines are expected to ensure a level playing field, better borrower protection and transparency in lending practices in the gold loan market. The rules would be effective beginning April 1, 2026.

This is what it means for ordinary borrowers, non-bank financiers, banks and for India’s booming gold loan industry.

Key Highlights of the New RBI Guidelines What Are the Key Highlights of the New RBI Guidelines?

1.  Tiered Loan-to-Value (LTV) Ratios

As a move to protect borrowers and lower lender risk, RBI has set new LTV limits using the size of the loan:

• Up to ₹2.5 lakh: Max LTV – 85%

• ₹2.5-₹5 lakh: Max LTV – 80%

• Above ₹5 lakh: Max LTV – 75%

This implies small-ticket borrowers can now extract more value against their gold than earlier.

2. Compulsory Assessment on the Basis of Cash Flow

For loans of over ₹2.5 lakh, lenders will have to use documentary cash flow to assess the borrower’s income and ability to repay. It is a change from the past, when valuation of gold alone determined suitability.

3. Unified Norms for Silver Loans

It is the first time that silver has been included as collateral under RBI lending schemes, as per the same criteria that that applies to gold. This presents new opportunities particularly for rural borrowers.

4. Stronger Borrower Protections

Lenders are directed by RBI to:

• Reveal the purity and weight of pledged gold / silver

• Insure the security as long as the loan continues

• Return the gold within 7 days after full repayment

• Pay borrowers for loss, damage, or delay.

This is welcome news for consumers, who can frequently experience delays or disagreements over valuations.

Response from Government and Industry

• The Finance Ministry has recommended that loans up to ₹2 lakh be kept out of the purview of the cash-flow based rules for assessment of loans.

• There the date of implementation may be extended to 1 January 2026, stipulating that the inclusion is subject to industry feedback.

• NBFCs such as Muthoot and Manappuram will have a near-term hit on their operation costs but gain in the long term from cleaner processes and standards.

Expert Insight

"This is a massive reform for India’s gold loan market. By blending borrower protection with risk-based controls, RBI is future-proofing gold lending."

— Rajan Malhotra, Gold Loan Analyst

Final Thoughts

This new RBI measure is especially welcome as gold loans are a very important part of personal and business finance in India, especially rural and semi-urban India. It pledges more trust, transparency, and protection in an industry that has long lacked formal standardization.

Just as the rules are rolled out over the next few months, both borrowers and lenders need to get ready to adjust.