RBI’s Gold Loan Rules: 8 Changes Banks and NBFCs Must Build Into Their Gold Loan Systems

A gold loan used to be one of the simplest products in a branch. The customer walks in with a chain, the appraiser weighs it and checks purity, and the customer leaves with the money soon after.

Customers still expect that speed. But RBI’s rules on lending against gold and silver have turned each step into something you need to be able to prove. Which price did you use to value the chain? Was the LTV right for this customer’s total borrowing? And when they repay, will the jewellery be back with them in time?

For commercial banks, these rules sit in Chapter IV of the Credit Facilities Directions, 2025, with the conduct and collateral rules in the Responsible Business Conduct Directions, 2025. NBFCs have a matching chapter in their own Directions. The paragraph numbers below refer to the commercial-bank versions, as updated on October 1, 2026.

Here are the eight rules we think matter most for the system behind your counter.

1. The LTV cap depends on how much the customer borrows

There’s no longer one LTV number for every gold loan. For consumption loans, the cap depends on the customer’s total gold loan amount (para 44):

Two details are easy to miss. For bullet repayment loans, LTV is worked out on the full amount due at maturity, interest included. And the cap applies for the whole life of the loan, not just on the day you sanction it (para 45).

What this means for your system: it has to look at the customer’s total exposure before picking the cap, and keep checking the ratio as gold prices move.

2. Valuation follows a formula, not a guess

The gold has to be valued at the reference price for its actual purity. You take the lower of two figures: the average closing price for that purity over the last 30 days, or the previous day’s closing price. The price has to come from the India Bullion and Jewellers Association (IBJA) or a SEBI-regulated commodity exchange (para 41). Only the metal counts. Stones and gems add nothing to the value (para 43).

What this means for your system: valuation should run on measured purity and net weight, and the file should show which price source was used.

3. Silver is covered too

The rules apply to jewellery, ornaments and coins made of gold or silver (para 33). There are weight limits per borrower: 1 kg of gold ornaments, 10 kg of silver ornaments, 50 g of gold coins and 500 g of silver coins (para 40).

What this means for your system: silver needs its own purity standards and weight checks, not a copy of the gold setup.

4. Bigger loans need a proper credit check

Once a customer’s total borrowing against gold or silver goes above ₹2.5 lakh, you need a detailed credit assessment that includes their ability to repay. For bullet loans, the ₹2.5 lakh threshold is measured against the amount due at maturity (para 34).

What this means for your system: small loans can stay quick, but anything above the threshold should be sent to underwriting automatically, without relying on someone at the branch to remember.

5. Bullet loans are capped at 12 months

A consumption loan with bullet repayment can run for 12 months at most (para 39). A renewal or top-up needs a formal request from the borrower, has to stay within the LTV cap, and is only allowed if the loan is standard. For a bullet loan, the accrued interest must be paid before it can be renewed. And every renewal or top-up must be clearly identifiable in your core banking or loan processing system (para 35).

What this means for your system: renewals can’t happen quietly in the background. Each one needs its own record and its own checks.

6. Know who owns the gold

The borrower has to declare that they are the rightful owner of what they’re pledging. If the same person keeps taking loans above a threshold you set, that pattern has to be looked at under your anti-money laundering monitoring (para 37).

What this means for your system: capture the ownership declaration on every file, and flag customers who pledge again and again.

7. Return the gold within seven working days, or pay

This is the rule customers will notice. When a loan is fully repaid, the pledged gold has to be returned the same day, and never later than seven working days (Responsible Business Conduct Directions, para 377). If the delay is the lender’s fault, the lender pays the borrower ₹5,000 for every extra day (para 388). If the jewellery is damaged while in your custody, you pay for the repair. If anything is lost, or the weight or purity doesn’t match, you compensate the borrower (paras 386–387).

What this means for your system: you need to know exactly where each packet is, from pouch number to vault to counter, so that closing a loan sets the release in motion straight away.

8. Disbursal goes to the borrower’s account

Gold loans should generally be paid into the borrower’s bank account, in line with KYC rules and the Income Tax Act limits on cash (Credit Facilities Directions, para 47). Bank transfers must go to the borrower, not a third party, apart from a few narrow exceptions (para 48).

What this means for your system: check the beneficiary account at disbursal and record how the money was paid.

A quick self-check

Be honest with these:

• Does your system pick the LTV cap from the customer’s total gold borrowing?
• Is every valuation based on measured purity, net weight and a recorded reference price?
• Can you lend against silver with its own rules?
• Do loans above ₹2.5 lakh go to credit assessment automatically?
• Are renewals and top-ups recorded and checked separately?
• Can you trace any gold packet from pledge to release?
• Would you know today if a release was about to cross seven working days?

If you answered “no” or “not sure” more than twice, there’s compliance risk sitting in your gold loan process.

How LENDperfect handles the gold loan journey

LENDperfect has a dedicated gold lending module, and gold loans and gold repledge are among the loan types our STP and Semi-STP framework supports. We designed the journey around two ideas: let the machines produce the numbers, and keep two people on every approval.

• Digital from the first touch. The appraiser records the customer and each ornament on a tablet, so there’s no paper appraisal slip.
• Weight and purity straight from the machines. Readings from the digital scale and the XRF purity analyser go into the proposal directly. Nobody re-keys them.
• A record for every item. Description, quantity, fineness, hallmark, and gross and net weight are logged item by item and linked to the purity test.
• Valuation and custody on one file. The margin is applied to the assayed value, and appraiser charges, jewel defects and the pouch number are recorded for custody tracking.
• Maker-checker approval. The appraiser sends the proposal to a named approver, who reviews and approves it in their own queue.
• Aadhaar eSign before payout. The customer gives digital consent before any money is released.
• One file from start to finish. Every ornament, weight, purity reading and approval sits under a single loan file.

Want more on this? Read how fintech is reshaping the gold loan process and how gold loan lenders cut processing time.

Frequently asked questions

What’s the maximum LTV for a gold loan in India? For consumption loans from banks: 85% up to ₹2.5 lakh per borrower, 80% between ₹2.5 lakh and ₹5 lakh, and 75% above ₹5 lakh.

How is gold valued for a loan? At the reference price for its actual purity. Lenders use the lower of the 30-day average closing price and the previous day’s closing price, published by IBJA or a SEBI-regulated commodity exchange. Stones and gems don’t count.

Can I get a loan against silver jewellery? Yes. Silver jewellery, ornaments and coins are accepted, up to 10 kg of ornaments and 500 g of coins per borrower.

How soon must a lender return my gold after I repay? On the day you repay in full, and no later than seven working days. If the delay is the lender’s fault, they owe you ₹5,000 for each day.

How long can a bullet gold loan run? Up to 12 months. It can be renewed after the accrued interest is paid, as long as it stays within the LTV cap.

See it on your own counter

Watch a pledge go from the scale and the purity test to approval, eSign and disbursal. Book a gold loan demo.

This article is for general information and isn’t legal or regulatory advice. It reflects RBI Directions as updated on October 1, 2026. Requirements vary by type of institution and can change. Check the latest Directions that apply to you and talk to your compliance team.