New RBI Gold Loan Rules 2026: LTV Limits, Repayment & Auction Changes Explained

Key Takeaways

• Higher LTV for small loans: borrowers taking up to ₹2.5 lakh can now get up to 85% of their gold's value, up from the old flat 75%.
• No detailed income check up to ₹2.5 lakh: a full credit appraisal is mandatory only when your total gold loans cross ₹2.5 lakh.
• Bullet loans: 12 months maximum, and you must pay the accrued interest before the loan can be renewed.
• Fairer valuation: gold is valued at the lower of the previous day's closing price or the 30-day average, and stones are excluded.
• Stronger borrower protection: ₹5,000-per-day compensation for late return, auction reserve price of at least 90% of market value, and surplus refund within 7 working days.

What Changed and Why

Until 2026, banks, NBFCs and cooperative banks each followed different gold loan instructions issued over many years. In June 2025 the RBI replaced them with a single set of directions — the Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025 — and gave lenders until 1 April 2026 to comply. The aim was to stop practices like repeated interest-only renewals, unclear valuations and slow return of pledged jewellery, while making small loans easier for ordinary borrowers.

The rules apply to commercial banks, small finance banks, urban and rural cooperative banks, and NBFCs, including housing finance companies. Loans sanctioned before your lender adopted the new directions continue under the older terms until they are closed or renewed.

Rule 1: New LTV Slabs — How Much You Can Borrow

LTV (Loan-to-Value) is the maximum loan as a percentage of your gold's assessed value. Instead of one flat limit, LTV now depends on the size of your total gold loan with that lender:

These are ceilings, not guarantees. A lender can offer less based on its own policy, and the LTV must stay within the limit for the entire tenure — so if gold prices fall sharply, you may be asked to pay down part of the loan or pledge more gold.

Worked Example: Maximum Loan on Your Gold

Assume your jewellery has an assessed value as shown (after the lender deducts stones and adjusts for purity). The maximum EMI-type loan works out like this:

Illustrative only. Actual loan depends on the lender's purity test, its own LTV policy and the reference gold price on the day. Use our gold loan EMI calculator to estimate your repayments.

Rule 2: Bullet Repayment Loans Are Capped at 12 Months

In a bullet repayment gold loan you pay nothing monthly — principal and interest are repaid together at the end. The new rules change two things:

• 1
  Maximum tenure of 12 months

  Bullet-repayment loans taken for personal or consumption needs cannot run beyond 12 months. They can be renewed after that, subject to the renewal rules below.

• 2
  Interest due at maturity counts towards LTV

  The lender must add the full interest payable at maturity to the principal when checking the LTV. So the amount you receive upfront is lower than on an EMI loan against the same gold.

Rule 3: How Your Gold Is Valued

Valuation used to vary widely between lenders. Now it follows a fixed method:

• 1
  Reference price

  The lender uses the lower of the previous day's closing price or the average closing price of the last 30 days, as published by the India Bullion and Jewellers Association (IBJA) or a SEBI-regulated commodity exchange.

• 2
  Valued at its actual purity

  Your jewellery is valued at the price for its actual purity (for example 22K or 18K). Where a price for that purity is not published, the nearest purity is used with a proportionate weight adjustment.

• 3
  Only the metal counts

  Stones, gems, wax and making charges are excluded. Only the intrinsic value of the gold itself is considered.

• 4
  Valuation in your presence

  Assessment of purity and weight should be done in front of you, and the result recorded in a pledge certificate that you keep.

Rule 4: Limits on How Much Gold You Can Pledge

Gold bars, bullion, gold ETFs and gold mutual fund units are not accepted as collateral, and lenders cannot give a loan to buy gold. You may also be asked for proof of ownership or a signed ownership declaration — see our list of documents required for a gold loan.

Rule 5: Credit Check Only Above ₹2.5 Lakh

For total gold loans up to ₹2.5 lakh per borrower, lenders are not required to carry out a detailed assessment of your income and repayment capacity — the gold itself is the main security. Once your total crosses ₹2.5 lakh, a full credit appraisal is mandatory, which means income documents and a credit report check. This is why a low score rarely blocks a small gold loan; read more in our guide on the CIBIL score required for a gold loan.

Rule 6: Renewals and Top-Ups

For the full renewal and recovery process, read our guide to gold loan renewal and auction.

Rule 7: Return of Your Gold — ₹5,000 Per Day for Delays

Once you repay the loan in full, the lender must return your pledged gold on the same day if possible, and no later than 7 working days. If the delay is the lender's fault, it must pay you ₹5,000 for every day beyond that deadline. The lender must also bear the cost of repairing any damage, and compensate you for loss of or discrepancy in your jewellery.

Rule 8: Fairer Auctions If You Can't Repay

Auction is a last resort, and the rules for it are now much tighter:

Rule 9: Clear Terms in Your Language

Your loan agreement and Key Fact Statement (KFS) must spell out the gold pledged and its value, all charges, the auction procedure and notice period, and the timeline for returning your gold. Key terms must be communicated in the regional language or the language you prefer. For borrowers who cannot read, the terms must be explained in the presence of an independent witness who is not a lender employee.

What These Rules Mean for You

Still deciding between options? Compare gold loan vs personal loan, or see the latest gold loan interest rates in India.

Checklist Before You Pledge Your Gold

• 1
  Ask which LTV slab applies

  Confirm the per-gram rate and the percentage the lender is actually offering, not just the headline "up to 85%".

• 2
  Watch the valuation

  Be present during the purity and weight test, and check that stones have been deducted fairly.

• 3
  Choose the repayment type deliberately

  Compare EMI, monthly-interest and bullet options — bullet loans now give a smaller upfront amount and must be closed within 12 months.

• 4
  Read the KFS

  Check the APR, processing fee, valuation charges, penal charges and auction terms before you sign.

• 5
  Keep your pledge certificate safe

  It lists the items, weight and purity — you'll need it to verify your jewellery when it is returned.