“In case of loans beneath ₹2.5 lakh, we’ll elevate LTV to 85% per borrower, and on this, curiosity can be included,” mentioned RBI Governor Sanjay Malhotra through the Financial Coverage Committee (MPC) media briefing.
Underneath the revised rules issued late night, the RBI launched differentiated loan-to-value (LTV) limits for consumption loans towards gold collateral. Debtors can now entry loans as much as ₹2.5 lakh at an LTV of 85%, loans between ₹2.5 lakh and ₹5 lakh at 80%, and loans above ₹5 lakh at 75%. For loans exceeding ₹2.5 lakh, lenders should perform detailed credit score assessments, together with evaluating the borrower’s compensation capability.
Shares of Muthoot Finance surged 7.35% and Manappuram Finance climbed 5.78%, main the monetary pack that climbed about 1.5% and helped the Nifty 50 finish above the psychologically essential 25,000 mark. The gold mortgage portfolio as of April 18, 2025, is ₹2.23 lakh crore, having greater than doubled year-on-year consistent with the surge within the world costs of the yellow metallic.
Malhotra clarified that the central financial institution has not launched new rules however has consolidated and reiterated present ones.
“Some regulated entities weren’t following them as there was no readability,” he mentioned.Banks and NBFCs are allowed to lend towards the collateral safety of gold jewelry, ornaments and cash to fulfill the short-term financing wants of debtors. When it comes to limits on the quantum of gold and silver that may be pledged, RBI has mentioned {that a} borrower can pledge as much as 1 kilogram of gold ornaments and 10 kilograms of silver ornaments throughout all loans. Within the case of cash, the cap is 50 grams for gold and 500 grams for silver.”For small loans, as much as ₹2.5 lakh the place gold is the collateral, there can be no want for credit score appraisal,” Malhotra mentioned. He added that end-use monitoring will now be relevant just for exposures beneath precedence sector lending.
In its annual report final month, the RBI mentioned it performed a joint assessment of choose regulated entities amid the sharp rise in gold loans, which confirmed irregularities equivalent to misuse of third events, gold valuation with out buyer presence, weak LTV monitoring, and opaque public sale practices. Following this, the RBI directed lenders to assessment their gold mortgage insurance policies and take corrective motion in a time-bound method.
