RBI Governor has given a big update regarding gold loan rules. He said that the final regulations related to gold loans will be issued soon.
The important thing is that now, for loans up to ₹2.5 lakh, only a declaration of ‘ownership’ of the gold will be enough. No credit appraisal will be required for such loans. Governor Malhotra also said that the earlier guidelines were only drafts, not the final rules. He mentioned that some regulated institutions were not following the current gold loan rules properly. That is why it has become necessary to implement the new rules in a clearer and stricter way.
This Much Gold Will Be Needed for a ₹2.5 Lakh Loan
The RBI Governor said that for small gold loans—up to ₹2.5 lakh—only the customer’s self-declared ownership of the gold will now be accepted. Around 2.5 lakh loan accounts could fall under this new rule.
The loan-to-value (LTV) ratio for these loans has been fixed at 85%. Earlier, some NBFCs and small banks were offering loans with an LTV of up to 88%.
What Does 85% LTV Mean?
An LTV of 85% means that if you pledge gold worth ₹100, you will get a loan of ₹85. Based on this, if someone wants a loan of ₹2.5 lakh, they will need to pledge gold worth around ₹2.94 lakh.
Type-I NBFC Rules to Be Reviewed
According to the RBI, these new guidelines will make gold loans safer and will help in better regulation of this sector. The Governor also said that there will be no change in the rules related to FII investment in banks for now. However, the rules for Type-I NBFCs will be reviewed, and suitable changes may be made if required.
With these new rules, small borrowers will get both ease and safety while taking gold loans.