Gold Loan Rules: Following input from non-banking financial companies (NBFCs), cooperative banks, and government agencies, the Reserve Bank of India (RBI) will relax two important clauses in its proposed gold loan framework: increasing the loan-to-value (LTV) ratio and exempting small-ticket borrowers from credit appraisals, Governor Sanjay Malhotra announced on Friday.

The new regulations will increase the LTV cap for small-ticket loans from 75% to 85%, exempt gold loans up to ₹2.5 lakh from credit appraisals, and enable borrowers to self-declare gold ownership in the absence of purchase invoices. These changes are intended to improve access to formal credit for rural and semi-urban borrowers.

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During the post-policy conference, Malhotra stated that the updated rules should be made public either by Monday or later today. Additionally, the RBI made it clear that end-use monitoring standards would only be applicable in cases where lenders requested priority sector designation. The revisions address worries that the April 2025 draft’s more stringent regulations will impede credit flow and push borrowers back to unofficial moneylenders. According to Malhotra, the final regulations would take business input into account and offer more thorough, simplified guidelines. He restated that stakeholders would be consulted and the wider ramifications would be evaluated before any final framework was released.

Numerous lenders have raised operational concerns since the draft’s publication, particularly smaller NBFCs and cooperative banks. The valuation of inherited or undocumented gold and the viability of more stringent evaluations for loans under ₹2 lakh, especially those categorized as agricultural credit, were major issues. The revisions address worries that the April 2025 draft’s more stringent regulations will impede credit flow and push borrowers.

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