RBI directed lending against gold collateral

Gold loan now availability increases from 75% to 85% 

Recently, in the RBI Directions 2025, the Reserve Bank of India announced the direction in the context of Lending Against Gold and Silver Collateral. RBI said, gold or silver accepted as collateral shall be valued based on the reference price corresponding to its actual purity (caratage). 

For this purpose, the lower of (a) the average closing price for gold or silver, as the case may be, of that specific purity over the preceding 30 days, or (b) the closing price for gold or silver, as the case may be, of that specific purity on the preceding day, as published either by the India Bullion and Jewellers Association Ltd. (IBJA). 

RBI said further that, IBJA rate or by a commodity exchange regulated by the Securities and Exchange Board of India (SEBI) shall be used. If price information for the specific purity is not directly available, the lender shall use the published price available for the nearest available purity and proportionately adjust the weight of the collateral based on its actual purity to arrive at valuation.

The maximum Loan to Value Ratio (LTV) ratio in respect of consumption loans against the eligible collateral shall not exceed LTV ratios as provided as: 1:  ≤₹2.5 lakh, 2: the LTV ration will be 85 per cent, 3: > ₹2.5 lakh & 4: ≤ ₹5 lakh, the related LTV ratio is suggested 80 per cent & 6: if the loan value is > ₹5 lakh, LTV to 75 per cent.  

In the context, Rajesh Rokde, Chairman-GJC said, “The increase in loan availability from 75% to 85% of gold value is a significant development that will empower businesses and individuals relying on gold-backed financing as this is also for loans up to ₹2.5 lakh.  

This revised loan-to-value ratio enhances liquidity, strengthens financial resilience, and elevates accessibility, particularly for small borrowers. We welcome this progressive move, as it aligns with the evolving needs of the industry and reinforces trust in gold as a stable and reliable asset. The RBI’s swift adoption of industry recommendations highlights its commitment to financial inclusion.”  

In the row, Avinash Gupta, Vice Chairman-GJC said by adding the point that, “The revised gold loan regulations, allowing 85% of gold value for loans up to ₹2.5 lakh, mark a pivotal shift in the industry. This modification provides greater financial flexibility, ensuring improved liquidity and convenience for consumers and small businesses.  

Such progressive policies reinforce confidence in gold-backed financing and drive economic growth. We acclaim the RBI for its timely response to industry needs, making credit more accessible to those who rely on gold for financial security.”