New RBI Guidelines for Gold Loans

Understanding the new RBI rules for gold loans

Gold has long been a trusted asset for securing loans in India. Whether it is for urgent medical expenses, education costs, or personal requirements, pledging your gold jewellery can provide quick financial relief. With the Reserve Bank of India’s (RBI) recent amendments, the RBI rule for gold loan has introduced important changes that borrowers must know. These gold loan new rule updates, effective from April 1, 2026, aim to bring more clarity, flexibility, and transparency in lending. It is therefore essential to understand how these changes impact you as a borrower. 

Let us explore the changes, their implications and the scope of these new rules in detail.

No loans for purchasing gold

One important change is that banks and NBFCs can no longer provide loans to buy gold in any form. This rule applies to jewellery, coins, ETFs, mutual funds, or any other gold-based investment. So, if you were planning to take a loan to purchase gold, you will now need to explore alternative financing options. This change is aimed at preventing the use of borrowed money for speculative gold purchases and encourages borrowers to use gold loans only for genuine needs like emergencies or personal financial requirements. It is important to understand this update to plan your finances wisely.

Lending against raw gold and financial products

Institutions are also barred from granting loans against raw gold, silver, or financial products backed by them. This means that loans can only be secured against processed gold items like jewellery, ensuring that the gold has a clear and verifiable value. 

Collateral type and the accepted eligibility

Following the recent amendment, Bajaj Finance has updated its eligibility criteria and services to comply with the new guidelines. Earlier, only gold jewellery was accepted as collateral for gold loans. Now, Bajaj Finance also accepts gold coins, ornaments, and other types of jewellery.

The single borrower limits for each collateral type are as follows:

1. Ornaments: A borrower can pledge up to 1 kilogram in total across all loans.
2. Coins: The total pledged weight cannot exceed 50 grams.
3. Jewellery: The limit is determined by the maximum loan amount offered by Bajaj Finance.
4. Overall exposure: The combined total of ornaments, coins, and jewellery pledged by a customer cannot exceed the maximum loan limit of ₹2 crore.

With these updated rules, it is now easier to pledge different forms of gold. You can quickly check your gold loan eligibility to see how much you can borrow against your ornaments, coins, or jewellery.

Expanded scope for gold loans

The RBI has broadened the scope of lending against gold with several relaxations:

• Working capital beyond jewellers: Previously, only jewellers could avail loans against gold for working capital. Now, this facility extends to all manufacturers using gold or silver as raw material.
• Inclusion of smaller banks: Smaller urban co-operative banks in Tier 3 and Tier 4 cities are now permitted to lend against bullion, increasing accessibility for borrowers in these regions.
• Extended repayment for gold metal loans (GML): The repayment period for GMLs may go up to 270 days, also covering outsourced jewellery makers. This extension provides borrowers with more time to repay their loans, easing financial pressure.

Stricter loan-to-value (LTV) ratios

The RBI has set stricter loan-to-value (LTV) ratios to mitigate risks:

• Loans Under ₹2.5 Lakh: The LTV ratio for these loans has been increased to 85%, up from the previous 75%. This change allows borrowers to access higher loan amounts against their gold.
• Loans Between ₹2.5 Lakh and ₹5 Lakh: The LTV ratio remains at 80%.
• Loans Above ₹5 Lakh: The LTV ratio is capped at 75%.

It's crucial to check your gold loan eligibility to understand how these LTV ratios apply to your specific situation, so you know the maximum amount you can secure under the new limits.

Transparent auction process in defaults

In cases of loan defaults, the auction process for pledged gold has become more transparent:

• Advance notice: Lenders must now provide proper advance notice to borrowers before auctioning pledged gold.
• Reserve price: The reserve price for the auction will be set at 90% of the market value. If two auctions fail, the reserve price can be lowered to 85%.
• Surplus amount: Any surplus amount from the auction must be returned to the borrower within seven days.

These measures aim to protect borrowers' interests and ensure fairness in the auction process.

Steps involved in the Bajaj Finance’s auction process:

1. SMS intimation to customers on interest and principal in regular frequency.

2. A physical letter to the customers post maturity to clear the interest and principal amount.

3. Intimation of auction process in case of non-payment of dues.

4. Newspaper advertisements on date and details of auction being conducted for cases that are due.

5. Actual auction intimation letter.

In case the customer does not clear the outstanding dues post the above steps BFL follows the auction process as per the RBI guidelines to recover outstanding loans efficiently.

Faster return of pledged gold

To safeguard borrowers, the RBI mandates that lenders return the pledged gold either on the same day or within seven working days after the loan is closed. If they fail to do so, a penalty of ₹5,000 for each day of delay will be charged. This step ensures timely release of your gold once the loan is repaid.

Importance of understanding these changes

Understanding these updated rules is vital for making informed decisions about gold loans. Whether you're considering taking a loan or currently have one, being aware of these gold loan rule changes can help you navigate the borrowing process more effectively.

Before proceeding, it's advisable to check your gold loan eligibility to ensure you meet the necessary criteria and understand the potential loan amount you can secure.

If you have further questions or need assistance in applying for a gold loan, feel free to reach out. We're here to guide you through the process and help you make the best financial decisions. 

With the new purity guidelines coming into effect from January 2026, you can plan ahead and check your gold loan eligibility to make the most of your gold assets. To apply, enter your mobile number now!

Note: Starting 1st April 2026, the new RBI rules for gold loans will be effective with Bajaj Finance. *