logo
Key highlights of new, unified gold and silver loan rules

Key highlights of new, unified gold and silver loan rules

New Indian Express10 hours ago

The Reserve Bank of India (RBI) has raised the Loan-to-Value (LTV) ratio for loan against gold and silver to 85% for loans up to Rs 2.5 lakh. This is part of RBI's new comprehensive set of rules for lending against gold and silver. The new rules, which will be effective from 1 April 2026, attempts to standardise and harmonise the existing guidelines and introduce new measures for better oversight, conduct, and consumer protection.
Here are the key highlights of the new rules:
Scope and purview of the rules: These rules apply to all commercial banks (excluding Payments Banks), primary (urban) and rural cooperative banks, and all Non-Banking Financial Companies (NBFCs), including Housing Finance Companies (HFCs). They cover loans for both consumption and income generation purposes where eligible gold or silver collateral is accepted.
Clear credit policy: Lenders are required to have a clear credit policy that should stipulate limits for single borrower as well as for aggregate portfolio and maximum Loan-to-Value (LTV) ratios. The policy must also detail valuation standards, gold/silver purity norms, and documentation for priority sector lending. For loans exceeding ₹2.5 lakh, a detailed credit assessment, including repayment capacity, is now compulsory.
Revised Loan-to-Value (LTV) ratio: The directions introduce a tiered maximum LTV ratio for consumption loans:
Up to ₹2.5 lakh: 85%
Above ₹2.5 lakh up to ₹5 lakh: 80%
Above ₹5 lakh: 75% This prescribed LTV ratio must be maintained throughout the loan tenor.
Standardised valuation procedures: Lenders must have a uniform procedure for measuring the purity and net weight of gold and silver collaterals. The rules require the presence of the borrower during assaying, with all deductions and defects clearly explained and documented in a certificate provided to the borrower.
No loan against ETFs, bullion: Lenders cannot offer loans against primary gold or silver (bullion, ETFs). One can pledge only up to 1 kg of gold ornaments and 10 kgs of silver ornaments for availing loan. Loans against coins are limited to 50 grams for gold and 500 grams for silver. The tenure for bullet repayment consumption loans is capped at 12 months, with renewals subject to credit assessment and payment of accrued interest.
SoP for Storage, auction, etc: Strict guidelines have been laid out for the handling, storage, and surprise verification of collateral. The lenders have now been asked to provide adequate notice to borrowers through regional and national newspaper advertisements before auctioning the pledged gold or silver. The first auction must be physical and conducted in the same district as the lending branch. Reserve prices are set at a minimum of 90% of current value, decreasing to 85% if the first two auctions fail.
Compensation and Unclaimed Collateral: Borrowers will be compensated for any damage or loss to pledged collateral attributable to the lender. In cases of delay by lenders in releasing pledged collateral after full repayment, compensation of ₹5,000 per day will be paid to the borrower beyond the prescribed seven working days.

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Odisha becoming industrial powerhouse: CM
Odisha becoming industrial powerhouse: CM

Hans India

time31 minutes ago

  • Hans India

Odisha becoming industrial powerhouse: CM

Bhubaneswar: Odisha is no longer the minerals hub of India, it is becoming a diversified industrial powerhouse, Chief Minister Mohan Charan Majhi said on Sunday. Majhi made the statement while interacting with industrialists at Lok Seva Bhavan, ahead of the first anniversary of his government. 'Odisha is no longer just a minerals and metals hub. We are becoming a diversified industrial powerhouse, where opportunity flows from port to plant and from cities to every aspirational district,' he said. The State is growing across 20 sectors -- from mining, metallurgy and metal downstream to emerging opportunities in chemicals, food processing, apparel and textiles, he said. Majhi spoke about the measures his government has taken to help industries. 'One year ago, the people of Odisha placed their faith in us to build a future that is inclusive, aspirational and transformative. Today, as we reflect on this first year, we do so with pride, in our progress and renewed commitment to the journey ahead,' he said. Maintaining that his government was focused on job creation, he urged the industrialists to join the journey of making the State an industrial powerhouse. 'Over the last year alone, 206 large projects were approved -- nearly double the average of the previous five years. These represent a total investment value of over Rs 4.5 lakh crore and an employment potential of nearly 2.9 lakh jobs,' he said. 'Since the Utkarsh Odish summit, 56 projects have already been taken up for ground-breaking and inauguration, with a combined investment of over Rs 1.78 lakh crore, and employment potential for Odisha industrial development, Mohan Charan Majhi, minerals to diversified industry, job creation, investment in Odisha, governance and reforms 1.1 lakh people. These numbers reflect not only our speed, but scale and substance,' he added. Attacking the previous Naveen Patnaik-led regime, Majhi said in many ways, his government has achieved more in this one year than the past five years combined through quiet, focused and committed action. In the coming year, he said the government will focus on four key priorities. 'First, the government will bring new policies that unlock emerging sectors and offer global competitiveness. Secondly, the government will expand the State's land bank and industrial infrastructure to meet future demand. Third, we will revamp our single window system and develop a modern, integrated project tracking platform. Fourth, we will work to deregulate and simplify burdensome rules and processes,' he said. He asserted that the next four years will lay the foundation for a prosperous Odisha.

Muthoot Finance rallies 10% in 2 days, mcap crosses ₹1 trillion; here's why
Muthoot Finance rallies 10% in 2 days, mcap crosses ₹1 trillion; here's why

Business Standard

time36 minutes ago

  • Business Standard

Muthoot Finance rallies 10% in 2 days, mcap crosses ₹1 trillion; here's why

RBI's revised guidelines are structurally positive for small-ticket credit lenders like Muthoot and Manappuram Finance, believe market analysts. Mumbai Listen to This Article Share price movement of gold finance companies today Shares of gold finance companies like Muthoot Finance (₹2,523.75) and Manappuram Finance (₹253.90) were trading higher for the second straight day, hitting new highs on the BSE in Monday's intra-day trade. These stocks were up in the range of 2 per cent to 3 per cent in intra-day deals. In the past two trading days, the stock prices of gold finance companies have rallied up to 10 per cent after the Reserve Bank of India (RBI) on Friday issued its final rules on loans against gold collateral, detailing

Kernex Microsystems hits the roof after JV secures Rs 183-cr KAVACH order from Western Railway
Kernex Microsystems hits the roof after JV secures Rs 183-cr KAVACH order from Western Railway

Business Standard

time36 minutes ago

  • Business Standard

Kernex Microsystems hits the roof after JV secures Rs 183-cr KAVACH order from Western Railway

Kernex Microsystems (India) frozen at its upper limit of 5% at Rs 1,292.90 after the company announced that its joint venture, the Kernex-KEC Consortium, has received a letter of acceptance (LoA) worth Rs 182.81 crore from Western Railway. The contract involves the provision of KAVACH Version 4.0 or the latest (formerly known as Train Collision Avoidance System TCAS), including the deployment of a communication backbone based on UHF and OFC on the PalanpurSamakhiyaliGandhidham section under the Ahmedabad Division of Western Railway. The project is valued at Rs 182.81 crore and is scheduled to be executed within 730 days. Kernex holds a 70% stake in the consortium. Kernex Microsystems (India) is engaged in the manufacture and sale of safety systems and software services for railways. The company's consolidated net profit surged 358.2% to Rs 32.59 crore on an 829.9% rise in total income to Rs 83.69 crore in Q4 FY25 over Q4 FY24.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store