Key Highlights
- Loans up to ₹2.5 lakh now enjoy an 85% loan‑to‑value ratio.
- Higher brackets capped at 80% (₹2.5‑5 lakh) and 75% (above ₹5 lakh).
- Central bank mandates stricter valuation, documentation, and monitoring to curb NPAs.
- Collateral must be valued at the lower of the 30‑day average or prior‑day price from IBJA/SEBI exchanges.
- Immediate release of collateral post‑repayment and prohibition of misleading advertisements.
Detailed Insights
Context and Rationale: In January 2025, gold‑loan assets were ₹1.78 lakh crore, up 76.9% year‑on‑year, while NPAs surged 28.58% to ₹6.8 thousand crore. Commercial banks alone recorded ₹2,040 crore in NPAs.
Regulatory Blueprint: The RBI’s new guidelines apply from 1 April 2026, replacing the old LTV structure. Loans up to ₹2.5 lakh receive 85% LTV, a concession aimed at enhancing financial inclusion for low‑income borrowers.
Collateral Governance: Lenders must include detailed collateral descriptions, auction terms, and release procedures in the loan agreement. Collateral released within the same day or within seven working days after settlement. Gold/silver stored beyond two years post‑settlement is treated as unclaimed, prompting special drives to locate owners.
Consumer Safeguards: Advertisements must be truthful, loans under Priority Sector Lending require end‑use monitoring, and lenders must provide secure infrastructure. Damages to collateral during valuation are borne by the lender.