In an effort to simplify and standardise gold lending, the Reserve Bank of India (RBI) has rolled out a gold loan draft that brings uniform set of rules for valuation, paperwork, and repayment across all lenders.
Whether you’re taking a gold loan for personal use or for running a business, gold loan rules affect how your gold is valued, how much you can borrow, and how quickly your jewellery is returned after repayment.
Here is a breakdown of the nine key RBI proposals or gold loan rules that the RBI has laid down:
RBI Proposal 1: Loan-to-Value (LTV) Caps
Under the RBI gold loan draft, the RBI has set tighter rules on how much you can borrow against your gold’s appraised value. In simple terms, you can now get about 75–85% of your jewellery’s worth for personal-use loans, depending on how big the loan is.
For bullet repayment loans (cases where the entire amount is cleared at once, as opposed to EMI-based loans), the Loan-to-Value (LTV) is worked out on the full amount due at maturity, not just what’s sanctioned. So, you may need to pledge a little more gold to stay within the limit.
RBI Proposal 2: Eligible Collateral
Only gold jewellery, ornaments, and specific bank-issued coins (22 karat or higher) are accepted. Bars, bullion, biscuits, or gold-backed financial products like ETFs usually don’t qualify.
What it means:
Loans can be taken against household jewellery and bank coins, but not against raw gold or non-bank coins.
RBI Proposal 3: Gold Purity Certificate
Every lender must now issue a gold purity certificate — either printed or electronic — that clearly states:
- Karat purity
- Gross and net weight
- Deductions for stones or other materials
- Image of the pledged items
- Final valuation used at sanction
One copy goes to the borrower, ensuring complete transparency.
Aspects to consider as a borrower:
Keep this certificate carefully because it an important proof of your gold’s purity and the value that was used to decide your loan amount.
RBI Proposal 4: Proof of Ownership
If the ownership of the jewellery is unclear, lenders will not approve loans. If you don’t have the purchase bill — which is quite common for old family jewellery — the lender may ask you to sign a self-declaration form and complete some extra KYC (Know Your Customer) checks to confirm ownership.
What it means for you:
Carry purchase bills if you have them, but don’t worry if you don’t. Genuine family jewellery can still be accepted after the lender does the necessary verification.
RBI Proposal 5: Standardised Valuation
Gold will now be valued using the 22-karat reference rate, based on the lower of the previous day’s closing price or the 30-day average. Data will come from IBJA or SEBI-approved exchanges. Lower-purity jewellery will be adjusted to 22-karat equivalent, and stones or pearls won’t count toward value.
What it means for you:
Only the gold content determines your loan value — not the stones or design.
RBI Proposal 6: Weight & Coin Limits
You can pledge as much as 1 kg of jewellery and 50 g of gold coins from approved banks, even if you hold multiple gold loans. To keep things secure, lenders sometimes apply tighter limits internally, especially for new customers or higher-value loans.
What you need to remember:
Large pledges may need to be split across loans or reduced to meet limits.
RBI Proposal 7: Fair Auction Rules
When you are unable to repay, the lender has the right to auction the gold. However, new rules make sure the process is done carefully and with full transparency.
- Public notice in two newspapers is mandatory.
- The reserve price must be at least 90% of current gold value.
- The first auction must take place physically in the same town or taluka as the loan branch.
- Any surplus from the auction must be refunded within seven working days.
What it usually implies:
Lenders can no longer hold quiet auctions; the process must be open and fairly priced.
RBI Proposal 8: Timely Release & Compensation
Once you repay the loan, the lender must return the pledged gold within seven working days.
If delayed, the lender must pay ₹5,000 per day as compensation. If there’s damage, repair is their responsibility; if lost, immediate compensation applies as per policy.
What it means:
Always keep repayment proof. If the lender delays release, you can claim compensation.
RBI Proposal 9: Bullet Loan Tenure & Renewals
For bullet repayment loans (where the borrower pays in one lump sum at the end), the RBI has limited the tenure to 12 months. Renewals or top-ups are allowed only if the account is regular and within the LTV limit. Borrowers must clear any due interest before renewal.
What it typically means:
Expect shorter tenures for bullet loans and stricter renewal checks. EMI options may suit longer borrowing needs better.
Further Reading: After RBI’s new rules, many borrowers are unsure whether bullet repayment or EMI is better. In “Bullet Repayment vs EMI Gold Loans: What’s the Difference?” we compare the two clearly, helping you see which works best for you.
How to Find the Best Gold Loan Rate
Before finalising, it helps to compare banks vs NBFCs on processing fees, prepayment charges and interest rates. Ask for the Key Fact Statement and see if the rate changes with delays or usage. Higher hallmark purity, lower LTV and EMI plans can sometimes lower the gold loan best rate.
Many lenders also offer flexible repayment options such as OD against gold or overdraft against gold, which work like a credit line. With these options, borrowers can withdraw funds as needed and pay interest only on the amount used.
Why RBI Proposals Matter When You Take a Gold Loan
The RBI’s 2025 framework has brought much-needed clarity and fairness to gold loans. The new RBI gold loan rules make valuation, documentation and repayment more transparent for borrowers. They also tighten control over auctions and release timelines — helping protect customer interests while keeping lending efficient.
Shriram Finance offers gold loans at competitive interest rates with quick disbursal and secure handling. To know more, visit the official website.
FAQs
What are the RBI guidelines for gold loan auction?
RBI rules require gold loan auctions to be transparent and publicly announced in advance. The auction should first be held in the same town or taluka as the branch. The reserve price for the auction is initially set at 90% of the current market value of gold. However, this is not a universal fixed rule for all auctions and can be adjusted based on auction outcomes. Borrowers must get proper notice before the sale, and any extra amount from the auction (after loan recovery) must be refunded within seven working days.
Who are not eligible for gold loan?
You cannot get a gold loan if you pledge ineligible items like gold bars, bullion, or digital/financial gold assets. Loans are also usually not approved if the ownership of the pledged gold is under question or if the gold has already been pledged elsewhere.
What is the trend in gold loans?
Across lenders, valuation, documentation, and audit standards are becoming more uniform. It’s all about making sure borrowers are treated fairly. The pledged gold’s value must be recorded properly, auctions should be open and just, and any extra money after repayment should go back to the borrowers without delay.
What is the new policy of gold loan in RBI?
The RBI’s 2025 gold loan framework brings common rules for both banks and NBFCs. It defines what kind of gold assets can be accepted, sets 22-karat as the benchmark for valuation and requires lenders to issue purity certificates. The new norms also cap bullet repayment loans for consumption use and lay down clear steps for auction and compensation in case of default.
How does gold loan become NPA?
If you miss the repayment window, the account may be marked as a Non-Performing Asset (NPA). In bullet repayment cases, it occurs when the LTV crosses the permitted range for 30 days or the loan isn’t settled at the due date. After classification, lenders must send a due notice before starting the auction.
What are the limitations of gold loan?
Gold loans have limits set by the RBI and lenders. These include caps on LTV ratio, ineligibility of bullion or gold ETFs and maximum limits on weight — often up to 1 kg of jewellery and 50 grams of bank coins. Gemstones are not counted for valuation. Bullet loans for consumption purposes have a maximum tenure of 12 months and borrowers taking multiple loans are subject to stricter scrutiny.