RBI makes changes in Gold and Silver Loan Framework, Here to Know
From Now onwards, the Borrowers are allowed to entail around 85% of the gold value as a loan as compared to 75% from previous one.
The Reserve Bank of India has come up with significant changes in gold and silver loan regulations. This new framework has been initiated for the borrower’s benefits along with tightening conduct rules for lenders.
Meanwhile, the revised rules will be applicable for all commercial and cooperative banks, NBFCs and Housing Finance companies. Therefore, the Borrowers who are willing to take loans against gold and silver ornaments, or coins should be aware about the eight major changes.
From Now onwards, the Borrowers are allowed to entail around 85% of the gold value as a loan as compared to 75% from previous one.
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This new Loan-to-Value scheme is applied to total loan amounts up to Rs 2.5 lakh, including interest. Therefore, now if the gold is worth Rs 1 lakh, one can now borrow up to Rs 85,000 instead of Rs 75,000 earlier. There will be no requirement of detailed income assessment or credit checks for gold loans below Rs 2.5 lakh. The step is taken to ease access for low-income and rural borrowers.
The Lenders are required to return the guaranteed gold or silver within the same day of loan closure, or within the seven working days and upon delay they would be required to pay Rs 5,000 per day to the borrower as compensation. There would be compensation paid if any pledged gold or silver is lost or found damaged during audits or return.
Meanwhile, in the case of loan defaults the lending organization will give proper notice before auctioning gold.
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Any details of Loan terms and valuation would be shared to borrower in their regional language. Moreover, the non-educated or illiterate borrowers must be informed in front of an independent witness.
This new framework will come into existence from April 1, 2026. Loans which were issued before this date will follow earlier norms.
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