RBI’s draft gold loan rules: What it means for you as a borrower

If you're planning to take a gold loan, big changes may be on the way. On April 9, the Reserve Bank of India (RBI) released a draft regulatory framework aimed at making gold-backed loans safer and more transparent for borrowers like you.

This proposed framework applies to all types of lenders—banks, NBFCs, co-operative banks, and regional rural banks (RRBs)—and focuses on making gold loan processes more consistent and customer-friendly.

During his post-Monetary Policy press briefing today, RBI Governor Sanjay Malhotra said the proposed guidelines on gold loans are not going to tighten such lending but rationalise it.
 
"The (draft) guidelines will be issued soon. To our mind, there is no tightening. It is a rationalisation only. It's broadly on the conduct side, primarily, whatever were the guidelines for NBFCs, those have been extended now to the banking sector also," he said.

What’s changing for borrowers?

Here’s what you need to know if you're considering or currently using a gold loan:

Clearer loan terms: Lenders will be required to assess your repayment capacity before approving a gold loan. That means no more blanket approvals—your income and ability to repay will play a key role.

Loan renewals and top-ups: You’ll only be able to renew or top-up an existing gold loan if it’s still considered “standard” and within the loan-to-value (LTV) cap. This adds a layer of protection, ensuring loans don’t spiral into unsustainable debt.

Transparency on valuation: Lenders must follow clear and consistent methods to assess the purity and value of your gold. This means more transparency when pledging your ornaments or coins.

No mixing of loan types: You won’t be able to take one gold loan for personal expenses and another for business use at the same time. The RBI wants to keep purposes separate to ensure better monitoring.

Better tracking: Lenders must regularly check how you’re using the loan amount and maintain proper records. This ensures your loan is being used for what you intended and protects you from future disputes.

Limits you should be aware of

Loan tenure for consumption loans: If you take a bullet repayment loan for personal use, the maximum tenure will be capped at 12 months.

Loan cap for small banks: Co-operative banks and RRBs can only offer such loans up to ₹5 lakh per borrower.

Gold limit per borrower: You can pledge up to 1 kg of gold ornaments and coins. But only up to 50 grams can be in coin form—and only if those coins are specially minted and sold by banks (22 carats or higher).

No primary gold as collateral: You can’t take a loan against raw gold, silver, or financial assets backed by them. Also, re-pledged or disputed gold won’t be accepted.

What's next?

The RBI is currently seeking feedback from the public and stakeholders. Once all comments are reviewed, a final version of the guidelines will be released.

In short, these draft rules are designed to protect borrowers and bring more fairness and clarity into the gold loan space. If you're planning to take a gold loan soon, it’s worth keeping an eye on these updates.