Game Changer: RBI Hikes Gold Loan LTV to 85%

Mumbai, India – In a move set to significantly boost financial liquidity for countless small businesses and individuals, the Reserve Bank of India (RBI) has announced a crucial increase in the loan-to-value (LTV) ratio for gold and silver loans.

The new regulation allows borrowers to avail up to 85% of their gold’s value for loans up to ₹2.5 lakh, a substantial jump from the previous 75% limit. This progressive policy, effective from April 1, 2026, has been widely applauded by industry bodies, who see it as a vital step towards financial inclusion and strengthening resilience.

The decision comes as a relief, particularly for those who rely on gold-backed financing for immediate financial needs. “The increase in loan availability from 75% to 85% of gold value is a significant development that will empower businesses and individuals relying on gold-backed financing, especially for loans up to ₹2.5 lakh,” stated Rajesh Rokde, Chairman of the Gem & Jewellery Council (GJC).

“This revised loan-to-value ratio enhances liquidity, strengthens financial resilience, and elevates accessibility, particularly for small borrowers. We welcome this progressive move, as it aligns with the evolving needs of the industry and reinforces trust in gold as a stable and reliable asset. The RBI’s swift adoption of industry recommendations highlights its commitment to financial inclusion.”

The revised norms are a direct response to industry recommendations, emphasizing the central bank’s responsiveness to the evolving needs of the financial ecosystem. Avinash Gupta, Vice Chairman of the GJC, echoed this sentiment, highlighting the pivotal shift it marks. “The revised gold loan regulations, allowing 85% of gold value for loans up to ₹2.5 lakh, mark a pivotal shift in the industry,” Gupta remarked. “This modification provides greater financial flexibility, ensuring improved liquidity and convenience for consumers and small businesses. Such progressive policies reinforce confidence in gold-backed financing and drive economic growth. We acclaim the RBI for its timely response to industry needs, making credit more accessible to those who rely on gold for financial security.”

For a gold article valued at, say, ₹100,000 (assuming 22K gold is around ₹90,000 per 10 grams, or ₹9,000 per gram), a borrower could now potentially receive ₹85,000, as opposed to the previous ₹75,000. This increased access to capital is expected to provide much-needed breathing room for small enterprises and households facing short-term financial challenges.

The new guidelines are also expected to simplify the process for small-ticket loans, with the RBI indicating that credit appraisal norms will not apply to these smaller gold loans, reducing documentation burdens. Additionally, end-use checks will only be needed if the loan falls under the Priority Sector Lending (PSL) framework, further streamlining the process.

While the new norms are slated to come into effect from April 1, 2026, the announcement itself has sent positive ripples through the market, with gold loan stocks already seeing an uplift. This move is seen as a strategic step by the RBI to formalize credit channels, particularly for the vulnerable segments of society who often rely on informal lending sources. By making formal gold loans more attractive and accessible, the central bank aims to safeguard borrowers’ interests and foster a more robust and inclusive financial environment.