The Reserve Bank of India (RBI) is bringing a fresh breeze of change to how you can use your gold or silver to secure a loan. These new rules, effective from April 1, 2026, make borrowing simpler, more inclusive, and far more borrower-friendly. Here’s how these guidelines will impact you.
Higher Loan Amounts for Small Borrowers
One of the biggest changes is the increase in the Loan-to-Value (LTV) ratio. For gold or silver loans under ₹2.5 lakh, the LTV has been raised from 75% to 85%. This means if your gold is worth ₹1 lakh, you can now get up to ₹85,000 instead of ₹75,000. For loans between ₹2.5 lakh and ₹5 lakh, the LTV stands at 80%, while loans above ₹5 lakh remain at 75%.
No Income Proof for Loans Up to ₹2.5 Lakh
In a game-changing move for rural India, low-income earners, and students, loans up to ₹2.5 lakh won’t require income proofs or credit checks. This opens easy access to quick cash for those previously excluded from formal credit systems.
Limits on Gold and Silver Pledging
Borrowers can pledge up to 1 kilogram of gold ornaments or 50 grams of gold coins, and up to 10 kilograms of silver ornaments or 500 grams of coins. These limits are applied per borrower across all lender branches, plugging any loopholes.
Faster Return, Penalty for Delay
Once you repay the loan, lenders must return your gold or silver the same day, or face a ₹5,000 per day penalty. Plus, if your valuables are lost or damaged, you’ll receive 100% compensation—no arguments.
Fair Auction, Bullet Repayment Option
If you default, lenders must auction the pledged items fairly, with reserve prices set at 90% of market value. Excess proceeds must be returned to you within 7 days. You can also opt for bullet repayment within 12 months.
Read more: Explained: RBI’s repo rate cuts, lower EMIs & higher savings
Focus on Transparency and Stability
The RBI also mandates that all loan terms be explained in your preferred language or in person via an independent witness if you're illiterate. Importantly, no loans can be taken against gold bars, bullion, ETFs, or digital gold, reducing risk for lenders and ensuring system stability.
