RBI's new gold loan rules 2026 — tiered LTV, bullet repayment cap, and your right to a ₹5,000-a-day penalty

If you’ve taken — or are planning to take — a loan against gold jewellery, the rules changed under you this year. The Reserve Bank of India’s Directions on Lending Against Gold and Silver Collateral, first issued as a draft in 2025, became fully binding on all lenders — banks, NBFCs, cooperative banks and gold-loan NBFCs like Muthoot and Manappuram — from 1 April 2026. With gold prices near record highs, gold loans have become one of the fastest-growing forms of secured borrowing in India, so it’s worth knowing exactly what you’re now entitled to.

The biggest change: loan-to-value is no longer a flat 75%

Earlier, every gold loan — big or small — was capped at 75% of the gold’s value (LTV). RBI has replaced that flat cap with a tiered structure that favours smaller borrowers:

Loan amount	Maximum LTV now
Up to ₹2.5 lakh	85%
₹2.5 lakh – ₹5 lakh	80%
Above ₹5 lakh	75%

In practice, someone pledging jewellery for a small, essential loan — say for a medical emergency or a child’s school fee — can now borrow more against the same gold than someone taking a large-ticket loan. Large borrowers stay at the older 75% ceiling.

Bullet-repayment loans now have a hard 12-month limit

Many gold loans are structured as “bullet repayment” loans, where you pay nothing monthly and settle the entire principal plus accumulated interest at the end of the tenure. RBI’s directions now cap the tenure of such bullet-repayment consumption loans at 12 months. Lenders can still offer longer-tenure gold loans, but only with periodic (EMI-style or interest-servicing) repayment — not as one lump-sum bullet at the end.

If a lender is pushing a bullet-repayment gold loan for longer than a year without any interim servicing, that’s now outside the RBI framework.

Only jewellery, ornaments and coins qualify — not gold ETFs or bullion

The directions also tighten what counts as eligible collateral. Lenders can accept gold and silver jewellery, ornaments, and coins as collateral. Lending against primary gold or silver bullion, or against financial instruments backed by gold (like gold ETF units or gold mutual fund units), is not permitted under this framework. If a lender offers to structure a loan against your gold ETF holdings using these rules, ask for clarity — it likely falls outside this collateral category.

Mandatory purity certificate at the time of pledging

Before your loan is disbursed, the lender must now issue a certificate stating the purity and gross/net weight of the gold, along with any deductions made for stones, lac (wax filler often used in jewellery) or alloy, and the value assigned to your collateral. This is meant to stop the old complaint of borrowers being under-valued at the counter with no documented basis. Keep this certificate — it’s your evidence of what was pledged and how it was valued, useful if there’s ever a dispute at closure.

Your gold must come back within 7 working days — or you get paid ₹5,000/day

This is the rule with the most direct financial teeth for borrowers. Once you repay your gold loan in full, the lender must return your pledged gold within 7 working days. If they don’t, they owe you ₹5,000 for every day of delay until the gold is returned.

Practically:

• Note the exact date you make your final repayment.
• If your gold isn’t back in your hands within 7 working days, you have a documented right to compensation — raise it with the branch first, and escalate to the RBI’s Integrated Ombudsman if unresolved.
• Ask for a written acknowledgement of your repayment date; it’s your proof for the 7-day clock.

What this means if you’re taking a gold loan now

1. Compare LTV by loan size, not just by lender’s headline rate. A lender advertising “up to 85% LTV” only applies that to loans under ₹2.5 lakh — check where your loan amount actually falls on the tiered table above.
2. Avoid open-ended bullet loans. If you’re borrowing a larger amount for longer than a year, expect (and prefer) a structure with periodic interest payments rather than one that lets interest silently compound to be paid at the end.
3. Insist on the purity/valuation certificate at disbursal — it protects you both at closure and in case of any auction dispute if you default.
4. Track your repayment date so you can hold the lender to the 7-working-day gold-return rule and claim compensation if they miss it.

Run the numbers on your repayment schedule with the EMI calculator before choosing a gold loan tenure, and check current lender rates on bank rates before you pledge.

Sources: RBI — Directions on Lending Against Gold and Silver Collateral (Harmonised Regulatory Framework); EY — RBI Gold Loan Guidelines 2025: Key changes and impact; Cyril Amarchand Mangaldas — FIG Paper No. 52: RBI Directions on Lending Against Gold and Silver Collateral; ClearTax — RBI’s New Gold Loan Rules 2025: Key Changes, Limits and Guidelines.