Gold Loan Rules Changing from January 1, 2026? What Borrowers Need to Know

To avoid misuse against the gold loans RBI has proposed the set of new rules. On May 30 Ministry of Finance said that they have examined the draft guidelines by the Reserve Bank of India on gold loans and suggested to ensure that the requirements of small borrowers who avail credit of up to Rs 2 lakh should not be adversely affected.   These new rules are expected to be effective from January 1, 2026. The Ministry's recommendations to the RBI emphasize protecting small gold loan borrowers, particularly in rural areas and farming communities.  As per the reports these new rules  will come into effect from January 1, 2026.

Relief for borrowers up to Rs 2 lakh?

The Finance Ministry has recommended to the RBI that gold loans of less than Rs 2 lakh be excluded from the proposed guidelines. This will help small borrowers get the loan amount in less time. The Finance Ministry has expressed its expectation that the RBI will issue the final guidelines only after considering the suggestions received from all stakeholders and the public.

Key points in RBI's draft (What will change?)
The RBI had issued a draft on gold loans in April and had invited suggestions on it by May 12. The following key changes are expected in these proposed guidelines:

1. Loan-to-Value Ratio (LTV): The Loan-to-Value (LTV) ratio on gold loans should not exceed 75%. This means that you will not get a loan of more than 75% of the value of the gold you have pledged.
2. Applicable to all NBFCs: Irrespective of the purpose of the loan, this LTV limit will be applicable to all gold loans offered by non-banking financial companies (NBFCs).
3. Bullet Repayment: In case of 'bullet repayment' (lump sum repayment) loans, the LTV ratio will be calculated based on the total amount due over the loan tenure.
4. Gold Loan Limit and Return Rules
5. Per Customer Limit: A customer can now borrow a maximum of one kilo (1000 grams) of jewellery. This rule will apply to both gold and silver.
6. Rules for gold coins: If you are taking a loan against a gold coin, the coin should be at least 22 carats and should be purchased from a bank. Loans will not be given on gold coins purchased from other places.
7. Coin limit: A customer can take a loan against a maximum of 50 grams of gold coin. In case of silver, a limit of 500 grams has been fixed per customer.
8. Return gold within seven days: It will be mandatory to return the pledged gold within a maximum of seven days after the loan is fully repaid. If this is not done, the financial institution will charge a penalty of Rs 5,000 per day to the customer.

Also Read : How to Withdraw PF Money via ATM and UPI? – Here’s What You Need to Know

Opposition to the gold loan proposal!
Since the RBI introduced the new draft, some political parties and farmers' organizations in Tamil Nadu have opposed it. Tamil Nadu Chief Minister MK Stalin has also written to Finance Minister Nirmala Sitharaman, requesting her to advise the RBI to reconsider the restrictions proposed in the new guidelines. Stalin has expressed concern about the impact of these rules on the farming community and the rural economy. It will be important to see what the RBI announces in the final regulations.