With rising gold prices and increasing reliance on gold-backed loans, the RBI’s new gold loan rules aim to regulate this booming segment. Whether you’re an individual borrower or a financial institution, understanding the RBI gold loan guidelines 2025 is essential to navigate the new norms, especially with the stricter LTV limits, renewal rules, and compliance checks. Let’s break down the changes and how they affect you.
| RBI’s 2025 gold loan rules cap the Loan-to-Value ratio at 75%, require income proof, and allow renewals only for standard loans—ensuring safer, more transparent gold lending across banks and NBFCs. |
9 New RBI Rules for Gold Loan
In April 2025, the Reserve Bank of India (RBI) issued a draft guideline to tighten and streamline gold loan practices across banks and NBFCs. Below is a quick snapshot of the 9 major proposals from the latest RBI circular on gold loans. For a deeper dive into each rule, keep scrolling — the detailed breakdown follows right after this section.
1. Loan-to-Value (LTV) Limited to 75%
Lenders can now only give loans up to 75% of your gold’s value. This helps keep lending safe and responsible.
2. No More Loans Without Income Proof
Borrowers must now show proof of income to get a gold loan — no more casual approvals.
3. Tighter Control on Renewals & Top-Ups
Gold loans can only be renewed or topped up if they’re still standard loans and follow the LTV limit.
4. Limit on Gold You Can Pledge
Only 1kg of jewelry or coins can be pledged — and just 50 grams of that can be in bank-issued 22-carat gold coins.
5. Only 22-Carat Gold is Considered
Valuation will be based only on the gold’s 22-carat purity. No added value for gems or lesser-purity gold.
6. Bullet Repayment Loans Limited to 12 Months
If you’re opting for a lump-sum repayment loan, the maximum tenure allowed is 12 months.
7. No Loans Against Raw Gold or Silver
Only ornaments and select gold coins are allowed. Raw gold, silver bars, or financial assets are not accepted.
8. Lenders Must Monitor Loan Usage
Banks and NBFCs are required to track how the loan is used, especially for business or income-based loans.
9. Stronger Loan Recovery & Auction Rules
Clear guidelines now govern how gold is auctioned, how customers are notified, and how they’re compensated in case of errors or losses.
Limitation for Gold Loans As per New RBI Rules
The RBI gold loan guidelines introduced several restrictions to tighten the lending environment. These changes impact how borrowers can access gold loans and what financial institutions are permitted to do. Here’s what’s no longer allowed under the RBI gold loan new rules 2025:
No Loans Against Primary Gold/Silver or Financial Assets
⇒ New RBI rules on gold loan NBFCs and banks prohibit loans against primary (unprocessed) gold or silver and financial assets.
⇒ Only ornaments and approved gold coins (up to 50g) are eligible.
1 Kilogram Limit for Gold Jewellery
⇒ Individuals can now pledge a maximum of 1kg of gold jewelry.
⇒ Of this, only 50 grams can be gold coins, and only bank-issued, 22-carat commemorative coins are allowed.
Bullet Loans Limited to 12 Months
⇒ Under the RBI circular on gold loan bullet repayment, loans repayable in a single lump sum are capped at a maximum tenure of 12 months.
⇒ No more long-tenure bullet repayments—this ensures better risk control for lenders.
One Loan, One Purpose
⇒ Borrowers must specify the end use of the loan.
⇒ Dual-purpose loans—personal + business—are not permitted.
This helps lenders track compliance and avoid misuse.
No Loan Without KYC + Income Verification
⇒ The RBI guidelines for gold loan companies now mandate thorough credit appraisal and income proof for loan approval.
⇒ Gone are the days of casual walk-in approvals—this move is set to reduce defaults.
Top-Ups Only After Interest Repayment
⇒ For bullet repayment loans, top-up or renewal is allowed only after interest is cleared.
⇒ Ensures transparency and reduces risk stacking.
These RBI norms for gold loans aim to make lending safer and more accountable for both the borrower and the lender.
RBI Guidelines on Gold Loans by Banks
When it comes to gold-backed lending, banks in India must strictly follow the RBI gold loan guidelines, especially after the recent regulatory overhaul in 2025. These RBI rules on gold loans for banks focus on risk management, borrower protection, and end-use monitoring.
Loan-to-Value (LTV) Ratio Capped at 75%
→ The maximum LTV under a gold loan, as per RBI directive, is now 75%.
→ Whether it’s a scheduled commercial bank or a cooperative bank, this limit cannot be exceeded, ensuring that borrowers don’t overleverage.
Gold Valuation Guidelines
→ Banks must follow a standard gold valuation method based on 22-carat purity, using either
• The average closing price over the last 30 days, or
• The previous day’s closing price published by IBJA or SEBI-recognized exchanges.
→ If the gold is below 22 carats, it will be proportionately adjusted.
Income & Credit Assessment is Mandatory
→ As per the RBI guidelines for gold loans for banks, a proper credit appraisal must be conducted.
→ Banks must evaluate the repayment capacity of the borrower before loan sanction.
Monitoring of Loan Utilization
→ Borrowers need to provide documentary proof of how the gold loan funds are used.
→ This is mandatory for all income-generating loans and for personal loans above a bank-defined threshold.
Renewals & Top-Ups Under New Checks
→ Gold loan renewals or top-up loans can only be granted if:
-
- • The existing loan is standard (not overdue).
- • There is enough margin under the 75% LTV limit.
- • A fresh credit appraisal is completed.
→ For bullet loans, top-ups are allowed only after clearing accrued interest.
Policy Inclusion & Staff Accountability
→ Every bank’s internal risk and credit policy must now include:
-
- • Valuation and assaying procedures.
- • Limits on loan amount per borrower.
- • Gold auction guidelines.
- • Procedures for staff accountability if norms are violated.
These RBI gold loan rules are designed to safeguard borrowers while maintaining the financial health of banks. By imposing stricter compliance, the RBI ensures that gold loans don’t turn into high-risk assets for banks.
RBI Guidelines for Gold Loan by NBFC
With the surge in gold-backed lending, Non-Banking Financial Companies (NBFCs) are under tighter scrutiny. The RBI gold loan new rules now bring NBFCs under a uniform regulatory framework, aligning them closely with banks. If you’re borrowing from popular institutions like Muthoot Finance or Manappuram, here’s what you need to know based on the new RBI rules for the gold loan NBFC segment:
Uniform Loan-to-Value (LTV) Ratio — Capped at 75%
→ Just like banks, NBFCs are bound by the maximum LTV under gold loans as per RBI directive of 75%.
→ This means if your gold is worth ₹1,00,000, you can borrow only up to ₹75,000.
No Lending Against Financial Assets or Raw Metals
→ Gold loan guidelines by RBI prohibit NBFCs from offering loans against:
-
- • Primary/raw gold or silver.
- • Financial instruments like bonds or mutual funds as additional security in gold loans.
Limited Collateral Weight
→ NBFCs can accept up to 1 kg of gold jewelry or coins, but
-
- • Gold coins must be issued by banks, up to 50 grams only.
- • Purity must be a minimum of 22 carats for valuation purposes.
Restrictions on Renewals & Bullet Loans
→ Renewals/top-ups are allowed only for standard loans and within the LTV limit.
→ For bullet repayment loans, top-ups can be offered only after clearing past due interest.
→ This avoids rollover abuse, a common issue previously flagged by the RBI.
Policy Mandates & Internal Controls
→ NBFCs must have a comprehensive gold loan policy, including:
-
- • Assayer qualifications (a trained expert who tests and determines the purity and value of metals).
- • Procedures for gold auction if a borrower defaults.
- • Internal audits for checking purity discrepancies.
- • Rules to compensate borrowers in case of lost or damaged collateral.
Enhanced Transparency in Valuation
→ The latest RBI circular on gold loans mandates NBFCs to use
-
- • Either the 30-day average or the previous day’s rate of 22K gold from IBJA or SEBI-approved sources.
- • No value additions for gemstones or designer components — only pure gold value counts.
End-Use Monitoring
→ NBFCs must ensure that loans are used for the declared purpose.
→ Especially in the case of income-generating activities, borrowers must provide proof of usage.
These RBI rules for gold loan companies help stop unfair practices and protect customers from borrowing too much or being misled. NBFCs now need to follow stricter rules and be more transparent in how they work.
RBI Guidelines on Gold Repayment
Gold loans have long been popular for their flexibility and ease of disbursement. However, with rising defaults and misuse, the RBI gold loan rules have introduced more structured repayment norms for both banks and NBFCs. Here’s what the latest RBI gold loan guidelines say about repaying your gold loan:
Repayment Capacity is Key Requirement
As per the RBI’s new rules for gold loans, lenders can no longer issue loans purely based on gold collateral alone.
• Proof of income or alternate repayment capacity is mandatory, especially for large loan amounts.
• A proper credit appraisal is now compulsory — lenders must ensure you can repay before sanctioning the loan.
Documentary Evidence for End-Use
The RBI guidelines for gold loan recovery require lenders to:
• Monitor loan utilization regularly.
• Collect documentary evidence for how the loan amount is used (especially for income-generating purposes).
• Even personal consumption loans above a certain amount (as defined by the lender) need proof of usage.
Also Read: Will Gold Rate Decrease in India
RBI Circular on Gold Loan Bullet Repayment
One of the most notable updates in the latest RBI circular on gold loans is about bullet repayment (where the entire loan + interest is repaid at the end of the term):
• Tenure is capped at 12 months for bullet loans.
• Top-ups or renewals are only allowed after repaying the accrued interest.
• No more ‘evergreening’ of loans — this move is aimed at reducing NPA (Non-Performing Asset) build-up.
Valuation at Repayment Time
• Lenders must reassess the purity and weight of pledged gold before release.
• Any mismatch or deterioration in gold quality during storage will be the lender’s responsibility.
• Compensation norms must be clearly outlined in the lender’s internal policies.
Fair Auction Protocol
In case of default, gold collateral may be auctioned — but RBI’s new guidelines require
• A formal auction notice to the borrower/legal heirs.
• A grace period for borrowers to settle dues before the auction.
• Use of only approved auctioneers.
Transparent bidding and provision for compensation in case of discrepancies or damage to the gold.
RBI Guidelines for Gold Loan Recovery
With the surge in gold loan demand and corresponding risk, the RBI gold loan guidelines have added stricter norms around loan recovery to protect both customers and the financial ecosystem. Here’s what the RBI rules on gold loan recovery now mandate:
No Unjust Recovery Practices
• As per the RBI guidelines for gold loan recovery, lenders — including banks and NBFCs — must ensure recovery is done ethically and within legal boundaries.
• Coercive or aggressive tactics are strictly prohibited.
• All recovery efforts must comply with RBI’s Fair Practices Code and relevant consumer protection laws.
Notice Before Action
• Before any recovery or auction action, lenders must issue a clear notice to the borrower.
• Borrowers must be given reasonable time to settle dues or raise objections.
• This applies even in cases of default, as per the latest RBI circular on gold loans.
Auction Protocol in Case of Non-Payment
• If the borrower fails to repay and recovery through regular means fails, the RBI rules on gold loans allow for auction of the pledged gold.
However, lenders must
-
- • Inform borrowers/legal heirs in advance.
- • Use registered and approved auctioneers only.
- • Disclose auction terms and timelines, and provide an opportunity for pre-settlement.
Compensation for Lost or Damaged Gold
If, during recovery or auction, any loss or damage occurs to the gold pledged, lenders are required by RBI gold loan rules to:
-
- • Compensate the borrower fairly.
- • Follow procedures laid out in their internal policies and risk management frameworks.
- • Address borrower grievances promptly, especially in case of mismanagement or valuation errors.
Proper Documentation is Key
• Lenders must document every stage of the recovery process.
• Maintain a clear audit trail to ensure the recovery was conducted lawfully and transparently.
• Any deviation can lead to regulatory action, especially under the RBI norms for gold loans.
By tightening its stance on recovery, the RBI gold loan new rules aim to discourage malpractice and encourage financial institutions to treat borrowers with dignity — while still ensuring dues are recovered fairly.
Suggested Read: Gold Loan Interest Rates
RBI Guidelines on Gold Loan Renewal
As part of the RBI gold loan new rules, the Reserve Bank of India has introduced clear and structured norms for gold loan renewals and top-up loans. These guidelines aim to prevent misuse and ensure responsible lending — especially in times of high gold prices and borrower defaults.
When is renewal allowed?
Under the RBI guidelines for gold loan sanction, a gold loan can only be renewed or topped up if:
• The existing loan is classified as a “standard asset” (i.e., not overdue).
• The loan-to-value ratio (LTV) remains within the permissible limits — as per the maximum LTV under gold loan as per RBI directive, that’s 75%.
• A fresh credit appraisal is done.
This prevents automatic or blind renewals that may increase borrower risk.
Formal Request is Mandatory
Borrowers must make a formal written request for a loan renewal or top-up. As per the RBI gold loan guidelines, lenders cannot assume or enforce a rollover unless the customer agrees and qualifies.
These requests must be properly recorded and traceable in the institution’s Core Banking System (CBS) or Loan Processing System (LPS).
Bullet Repayment Loans: Special Rule
The RBI circular on gold loan bullet repayment specifically states:
“Renewals or top-ups of bullet repayment loans shall only be allowed after the interest accrued is paid off.”
In other words, borrowers need to clear existing dues before getting any top-up facility.
Identification in Systems
RBI also mandates that all renewals and top-ups must be clearly marked and distinguishable in the bank or NBFC’s internal systems. This is to avoid confusion and maintain transparency in audit trails and borrower history.
No Backdoor Loans
One of the major goals of these new RBI rules for gold loans is to stop institutions from using renewal/top-up methods as a way to give additional loans without proper scrutiny.
By enforcing these conditions, the RBI guidelines for gold loan companies bring uniformity and discipline across the sector.
Impact of RBI Gold Loan Rules on Lenders & Borrowers
The RBI gold loan new rules aren’t just a regulatory formality—they’re reshaping the entire gold loan ecosystem. From stricter lending norms to improved transparency, these changes are bound to impact both borrowers and lenders across the board.
Impact on Borrowers: More Protection, But More Paperwork
Benefits:
• Fairer Valuation: Thanks to clearer gold purity norms and valuation procedures, borrowers get a more standardized and fair loan amount.
• Regulated Loan Limits: RBI’s 75% LTV cap protects borrowers from taking on too much debt.
• Purpose Monitoring: Loans can’t be misused for unspecified reasons—there must be proof of where the money is going.
• Loan Clarity: With tighter rules on bullet repayments and renewals, borrowers can now plan their repayments better.
Challenges:
• No Easy Loans Anymore: The days of getting a quick gold loan without income proof are over. Borrowers must now prove repayment capacity.
• Limited Top-Ups: Can’t just extend or renew loans endlessly without meeting certain conditions.
• Quantity Cap: The rule on pledging a max of 1 kg of gold and just 50g of coins (from banks only) may restrict big-ticket borrowers.
For Lenders: Accountability & Standardization
Advantages:
• Reduced NPA Risk: With tighter norms, especially around gold valuation and end-use monitoring, the chances of defaults and frauds go down.
• Improved Trust: Lenders can gain customer trust by operating under a transparent and uniform regulatory umbrella.
• Efficiency in Audit & Recovery: Detailed RBI guidelines for gold loan recovery and procedures for unclaimed gold collateral improve operational discipline.
Trade-Offs:
• Extra Compliance Load: NBFCs and cooperative banks must now update their policies, systems, and audit procedures in line with the RBI circular for gold loans.
• Tougher for Small Players: Smaller NBFCs may struggle to comply with detailed procedures for assaying, auctioning, and risk assessment.
In Conclusion
With skyrocketing gold prices and increasing loan demand, the RBI’s new rules for gold loans are a timely step. While they tighten the lending environment, they also make it safer, more standardized, and borrower-friendly.
Lenders now have a consistent playbook, and borrowers get more transparency and protection.
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Frequently Asked Questions
What is the new rule for gold loans?
The RBI’s new rules include a stricter LTV ratio at 75%, income-based lending, and clearer valuation norms to prevent misuse and ensure transparency.
What is the RBI announcement on gold?
In April 2025, RBI proposed draft guidelines to standardize gold loan practices across banks and NBFCs due to rising defaults and unregulated lending.
Why did the RBI stop gold loan renewal?
RBI hasn’t stopped renewals completely; it now allows them only if the loan is standard, within LTV limits, and backed by a fresh credit check.
What are the RBI guidelines for gold loan renewal in 2025?
Loans can be renewed only if classified as ‘standard,’ with available LTV headroom, and after a formal request plus repayment capacity reassessment.
What happens if I don’t renew my gold loan?
If not renewed or repaid on time, the gold loan may turn into a default, potentially leading to interest penalties or even auction of the pledged gold.
What are the rules for gold loan repayment?
Gold loans must be repaid based on the loan type—bullet repayment loans now have a 12-month maximum term; EMIs and partial payments are also allowed.
Is there any limit for gold loans?
Yes, cooperative and rural banks can offer gold loans up to ₹5 lakhs. Also, only up to 1 kg of gold is allowed as collateral, as per RBI’s revised limits for small cooperative and regional rural banks.
What is the RBI policy on gold loans?
RBI’s policy now focuses on regulated valuation, responsible lending, a 75% LTV cap, renewal controls, and documentation of loan usage.
Who are not eligible for a gold loan?
Those without documented income or repayment capacity, or who try to pledge ineligible gold (like below 22K purity or non-bank-issued coins), may be denied.
Can I take a gold loan twice?
Yes, you can take a gold loan again, but only after repaying or closing the previous loan or via a valid top-up as per RBI rules.
Can I get a loan if I already have 2 loans?
Yes, but lenders will assess your repayment ability before granting another loan—including your credit history and income.
What is the LTV of a gold loan in RBI?
RBI has capped the Loan-to-Value (LTV) ratio at 75%, meaning you can get a maximum of ₹75 for every ₹100 worth of gold pledged.
