RBI New Draft Rules for Gold Loans:
The Reserve Bank of India released new draft rules for gold loans to address rising defaults and standardize lending practices.The RBI’s draft guidelines aim to regulate and harmonize gold loan practices across banks and NBFCs, enhance borrower protection, and reduce the risk of asset loss due to over-leveraging.Loans only allowed against gold jewellery and bank-issued coins. Loan-to-Value (LTV) Cap ratio capped at 75% of gold’s assessed value. For bullet repayment loans, interest must be included in LTV, reducing the loan disbursed.Primary gold like bars, ingots, bullion cannot be used as collateral.Fresh loans allowed only after full repayment of principal and interest. Lenders must return gold within 7 working days or pay ₹5,000/day compensation.Consumption loans must follow stricter tenure norms (max 12 months). Business-purpose loans must be evaluated based on cash flow, not collateral value.
