RBI Issues Unified Gold & Silver Loan Guidelines 2025: New Norms, LTV Caps, and Conduct Rules

Reserve Bank of India introduces a harmonised framework for loans against gold and silver collateral, with new norms for valuation, storage, auction, and borrower protection.

NEW DELHI (India CSR): Reserve Bank has restricted lending against primary gold such as gold bullion due to broader macro-prudential concerns as also due to speculative and non-productive nature of gold. However, the regulated entities (REs) have been permitted to lend against the collateral security of gold jewellery, ornaments and coins for meeting the short-term financing needs of borrowers. Prudential and conduct related regulations for such loans have been issued at different points in time for different REs. While the core philosophy of regulating such loans remains the same across different REs, the regulations vary in certain aspects due to differences in REs’ mandates and risk-taking capabilities.

The extant regulations are guided, inter alia, by the objective of providing the borrowers an avenue to tide over their tight liquidity conditions by leveraging the gold jewellery, ornaments or coins that are kept idle, while simultaneously addressing the risks for the lenders. Similar concerns and objectives guide a few regulations issued in the past on lending against the collateral of silver.

2. As a part of moving towards a more principle-based and harmonised regulatory framework and addressing possible prudential and conduct related gaps across the REs, the revised instructions on the matter are consolidated in the comprehensive Directions on Lending Against Gold and Silver Collateral applicable to all REs. The regulatory objectives behind these revised Directions are to: (i) put in place a harmonised regulatory framework for such loans applicable across various REs; (ii) address the concerns observed relating to some of the lending practices being followed and provide necessary clarity on certain aspects; and (iii) strengthen the conduct-related aspects.

B. Powers Exercised and Commencement

3. In exercise of the powers conferred by the sections 21, 35A and 56 of the Banking Regulation Act, 1949; Sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934; and Sections 30A, 32 and 33 of the National Housing Bank Act, 1987; the Reserve Bank of India (hereinafter called the Reserve Bank) being satisfied that it is necessary and expedient in the public interest and in the interest of depositors to do so, hereby, issues these instructions hereinafter specified.

4. Instructions issued vide these Directions shall be complied with as expeditiously as possible but no later than April 1, 2026. Loans sanctioned prior to the date of adoption of the Directions by the RE shall continue to be governed by the extant guidelines applicable before the issuance of these Directions.

C. Scope

5. These Directions shall apply, unless specified otherwise, to all loans offered by an RE mentioned below for the purpose of consumption or income generation (including farm credit) where eligible gold or silver collateral is accepted as a collateral security.

1. Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks, but excluding Payments Banks).
2. Primary (Urban) Co-operative Banks (UCBs) & Rural Co-operative Banks (RCBs), i.e., State Co-operative Banks (StCBs) and Central Co-operative Banks (CCBs).
3. All Non-Banking Financial Companies (NBFCs), including Housing Finance Companies (HFCs).

D. Definitions

6. In these Directions, unless the context otherwise requires, the terms herein shall bear the meanings assigned to them as given below:

1. “Bullet Repayment Loans” means loans where both principal and interest are due for payment at the maturity of the loan.
2. “Collateral Security” or “Collateral” means an existing asset of the borrower pledged to the lender for availing and securing a credit facility extended by the lender to the borrower.
3. “Consumption Loan” means any permissible loan that does not fit the definition of income generating loan as defined in paragraph 6(vi) below.
4. “Eligible Collateral” means the collateral of jewellery, ornaments or coins made of gold or silver.
5. “Loan to Value (LTV) ratio” on a day means the ratio of the outstanding loan amount to the value of the pledged eligible collateral as on that day. In case of bullet repayment loans, however, the LTV calculation shall take into account the total amount repayable at maturity.
6. “Income Generating Loan” means loans extended for the purpose of productive economic activities, such as farm credit, loans for business or commercial purposes, loans for creation or acquisition of productive assets etc.
7. “Jewellery” means items that are designed to be worn as personal adornments.
8. “Lender” means an RE which provides or intends to provide loans against eligible collateral.
9. “Ornaments” means items meant for use as adornment of any object, decorative items, or utensils, excluding those items that fall under the definition of jewellery as defined under 6(vii) above.
10. “Primary Gold and Primary Silver” mean gold and silver in any form other than in the form of a jewellery, ornaments and coins.
11. “Top-up Loan” means an additional loan sanctioned over and above an outstanding loan, during the tenor of the original loan, based on the strength of the collateral already pledged for the existing loan.

7. All other expressions unless defined herein shall have the same meanings as have been assigned to them under the Banking Regulation Act, 1949 or the Reserve Bank of India Act, 1934, or any statutory modification or re-enactment thereto or in other relevant regulations issued by the Reserve Bank or as used in commercial parlance, as the case may be.

E. General Conditions Applicable to all Loans against Eligible Collateral

8. The credit policy (hereinafter called the policy) of a lender, as required in terms of the extant directions, shall include, inter alia, appropriate single borrower limits and aggregate limits for the portfolio of loans against eligible collateral as defined in these Directions; maximum LTV ratio permissible for such loans; action to be taken in cases of breach of LTV ratio; valuation standards and norms; and standards of gold and silver purity. The policy shall also include appropriate documentation to be obtained and maintained for loans proposed to be categorised under priority sector lending.

9. The policy/ Standard Operating Procedures (SOPs) prepared under the policy shall also cover the conduct related aspects relating to the assaying procedure; criteria/ qualifications for employing gold and silver assayer or valuer; the auction procedure specifying, inter alia, the trigger event for the auction of eligible collateral and timeline for serving an auction notice upon the borrower; mode of auction; notice period allowed to the borrower(s)/ legal heir(s) for settlement of loan before auction; empanelment of auctioneers; procedure to be followed in case of loss of eligible collateral pledged or any deterioration or discrepancy in quantity or purity of eligible collateral during internal audit or otherwise, including at the time of return or auction of the collateral, and fair compensation to be paid to the borrower(s)/ legal heir(s) in such cases, with timelines for effecting the same, etc.

10. As required in terms of the extant guidelines, a lender may decide on a suitable approach for lending against eligible collateral as part of its credit risk management framework, consistent, inter alia, with the principle of proportionality and ease of access for small ticket loans. However, detailed credit assessment, including assessment of borrower’s repayment capacity shall be undertaken in case the total loan amount¹ against eligible collateral is above ₹2.5 lakh to a borrower.

11. A lender may renew an existing loan or sanction a top-up loan upon a formal request from the borrower and subject to a credit assessment in accordance with paragraph 10. Such renewal or top-up shall be permitted only within the permissible LTV, and provided the loan is classified as standard. Further, renewal of bullet repayment loan shall be allowed only after payment of accrued interest, if any. The lender shall ensure that such renewals and top-ups are clearly identifiable in its Core Banking System or Loan Processing System.

Restrictions and Ceilings

12. A lender shall not grant any advance or loan against primary gold or silver or financial assets backed by primary gold or silver, e.g., units of Exchange-traded funds (ETFs) or units of Mutual Funds.

13. A lender shall not extend a loan where ownership of the collateral is doubtful. A suitable document or declaration shall be obtained from the borrower in all cases to the effect that the borrower is the rightful owner of the eligible collateral. Multiple or frequent sanction of loans against eligible collateral to the same borrower, aggregating to a value in excess of a threshold to be decided by the lender, must be examined closely as part of the transaction monitoring under the anti-money laundering (AML) framework.

14. A lender shall not:

1. Avail loans by re-pledging gold or silver pledged to it by its borrowers.
2. Extend loans to other lenders, entities or individuals by accepting gold or silver collateral pledged to such lenders, entities, or individuals by their borrowers as collateral.

For removal of doubt, it is clarified that the above provision does not preclude a lender from financing another lender against the security of underlying receivables.

15. Tenor of consumption loans in the nature of bullet repayment loans shall be capped at 12 months, which may be renewed in terms of paragraph 11.

16. Loans against ornaments and coins shall be subject to the following:

1. the aggregate weight of ornaments pledged for all loans to a borrower shall not exceed 1 kilogram for gold ornaments, and 10 kilograms for silver ornaments.
2. the aggregate weight of coin(s) pledged for all loans to a borrower shall not exceed 50 grams in case of gold coins, and 500 grams in case of silver coins.

Valuation and Assaying of Gold and Silver collateral

17. Gold or silver accepted as collateral shall be valued based on the reference price corresponding to its actual purity (caratage). For this purpose, the lower of (a) the average closing price for gold or silver, as the case may be, of that specific purity over the preceding 30 days, or (b) the closing price for gold or silver, as the case may be, of that specific purity on the preceding day, as published either by the India Bullion and Jewellers Association Ltd. (IBJA) or by a commodity exchange regulated by the Securities and Exchange Board of India (SEBI) shall be used. If price information for the specific purity is not directly available, the lender shall use the published price available for the nearest available purity and proportionately adjust the weight of the collateral based on its actual purity to arrive at valuation.

18. For the purpose of valuation, only the intrinsic value of the gold or silver contained in the eligible collateral shall be reckoned and no other cost elements, such as precious stones or gems, shall be added thereto.

Loan to Value Ratio (LTV)

19. The maximum LTV ratio in respect of consumption loans against the eligible collateral shall not exceed LTV ratios as provided in the table below:

20. The prescribed LTV ratio shall be maintained on an ongoing basis throughout the tenor of the loan.

F. Conduct Related Aspects

Standardisation of Procedure for Assaying and Valuation of Gold and Silver collateral

21. A lender shall ensure that a standardised procedure is put in place to assay the purity of gold and silver collateral, its weight (gross as well as net), etc. This procedure shall be adopted uniformly across all its branches for all assaying procedures, without any deviation.

22. A lender shall display on its website the methodology adopted by it for determination of net weight of the gold and silver content of the eligible collateral and the price used to value the gold and silver content of the eligible collateral for determination of LTV ratio.

23. A lender shall ensure presence of the borrower(s) while assaying the collateral at the time of sanctioning the loan. The deductions relating to stone weight, fastenings, etc., as part of the assaying procedure shall be explained to the borrower(s) and details incorporated in the certificate to be issued³.

24. Post pledging, cases involving loss of gold or silver collateral and any deterioration or discrepancy in quantity or purity observed during internal audit or otherwise including at the time of return or auction of collateral shall be recorded and communicated promptly to the borrower(s)/ legal heir(s). The process for making reimbursement or compensation as per the policy or SOP shall also be communicated to the borrower(s)/ legal heir(s).

Standardisation of Documents and Communication

25. Documentation shall be standardised across all branches of a lender.

26. The loan agreement shall cover the description of the eligible collateral taken as security, value of such collateral⁴, details of auction procedure and the circumstances leading to the auction of the eligible collateral, the notice period which shall be allowed to the borrower for repayment or settlement of loan before the auction is conducted, timelines for release of pledged eligible collateral upon full repayment or settlement of loan, refund of surplus, if any, from the auction of the pledged eligible collateral and other necessary details. All applicable charges payable by the borrower, including those related to assaying, auction, etc., shall be clearly included in the loan agreement and Key Fact Statement (KFS).

27. A lender, while accepting the eligible collateral, shall prepare a certificate or e-certificate in duplicate on its letterhead regarding the assay of the collateral and state therein the purity (in terms of carats); gross weight of the eligible collateral pledged; net weight of gold or silver content therein and deductions, if any, relating to weight of stones, lac, alloy, strings, fastenings, etc.; damage, breakage or defects, if any, noticed in the collateral; image of the collateral; and the value of collateral arrived at the time of sanction⁵. One copy of the certificate or e-certificate shall be kept as part of the loan documents and the other copy be given to the borrower under their acknowledgement.

28. All communication with the borrower, especially, the terms and conditions of the loan, or other important communication which affects the interest of the borrower or the lender, shall be in the language of the region or in a language as chosen by the borrower. For an illiterate borrower, important terms and conditions shall be explained in the presence of a witness, who shall not be an employee of the lender.

G. Collateral Management

Handling and Storage of Collateral

29. A lender shall ensure that necessary infrastructure and facilities are put in place and appropriate security measures taken in each of its branches where loans are sanctioned against gold or silver collateral.

30. A lender shall ensure that the gold and/ or silver collateral is handled only in its branches and only by its employees.

31. A lender shall store the collateral only in its branches which are manned by its employees and having safe deposit vaults fit for storing gold and silver. Normally, such loans shall not be extended by branches that do not have appropriate secured facility for storage of the pledged eligible collateral.

32. The pledged eligible collateral may be transported from one branch to another branch, only as permitted under paragraph 41 below or in case of shifting or closure of branch(es) or exceptional reasons as per the process laid down by the lender in terms of its policy.

33. A lender shall periodically review the adequacy of systems for storage of the eligible collateral, conduct training of the concerned staff and carry out internal audit of all procedures to ensure that these are strictly adhered to.

34. As part of internal audit, a lender shall carry out periodic surprise verification of the gold and silver collateral pledged with it and shall maintain a record thereof. A clause in the loan agreement shall be included for obtaining consent of the borrower(s) to carry out surprise verification including assay of the pledged eligible collateral even in their absence during the tenor of the loan. This aspect shall be specifically communicated to the borrower at the time of sanctioning the loan.

Release of Collateral after Repayment

35. A lender shall release or return the pledged eligible collateral held as security to the borrower(s)/ legal heir(s) on the same day but in any case, not exceeding a maximum period of seven working days upon full repayment or settlement of the loan.

36. At the time of release of pledged eligible collateral to the borrower(s)/ legal heir(s), the collateral shall be verified for correctness as per details in the certificate⁶ to the borrowers’ satisfaction.

Transparency in Auction Procedure

37. A lender shall give adequate notice to the borrower(s)/ legal heir(s), as applicable, through available means of communication to repay or settle the loan dues prior to initiating the auction procedure. A copy of the notice and acknowledgement thereof shall be kept on record in both scenarios. In case the lender is unable to locate the borrower(s)/ legal heir(s) despite best efforts and even after issuance of a public notice, it may proceed with the auction, provided that a period of one month has lapsed from the date of the public notice.

38. A lender shall implement a transparent auction procedure, which shall include, inter alia, announcement of the auction to the public by issue of advertisements in at least two newspapers, one in the regional language and another in a national daily.

39. The pledged eligible collateral shall be auctioned by a lender only through its employee having necessary experience and/ or training or an auctioneer empanelled by the lender as per its policy. In cases where auctions are conducted by a lender through their employees, necessary safeguards such as surprise visits by regional/ controlling officials on periodic basis, coverage under internal audit, etc., shall be put in place.

40. A lender shall declare a reserve price for the gold and silver collateral at the time of auction, which shall not be less than 90 per cent of its current value⁷:

Provided that in case auctions fail twice, a reserve price not less than 85 per cent of its current value shall be adopted.

41. The first auction shall be conducted physically in the same district in which the lending branch is located. However, in case of failure of first auction, a lender may conduct the auction in an adjoining district or conduct online auction.

42. As a matter of policy, the lender or its related parties shall not participate in the auctions to ensure that there is no potential conflict of interest.

43. After the auction, the lender shall mandatorily provide full details of the value fetched at the auction and the dues adjusted to the borrower(s)/ legal heir(s). The surplus, if any, from the auction of the gold or silver collateral, shall be refunded to the borrower(s)/ legal heir(s) within a maximum period of seven working days from the date of receipt of the full auction proceeds. The lender may recover shortfall, if any, as per terms of the loan agreement.

Compensation

44. In case of any damage to the pledged eligible collateral by the lender during the tenor of loan, the cost of repair shall be borne by the lender.

45. In case of loss of the pledged eligible collateral and/ or any loss emanating from deterioration or discrepancy in quantity or purity observed during internal audit or otherwise including at the time of return or auction of collateral, lenders shall suitably compensate the borrower(s)/ legal heir(s).

46. In case of delay in release of the pledged collateral after full repayment or settlement of loan by the borrower, where reasons for delay are attributable to the lender, the lender shall compensate the borrower(s)/ legal heir(s) at the rate of ₹5,000 for each day of delay beyond the timeline prescribed at paragraph 35 above. If the delay is not attributable to the lender, it shall communicate reasons for such delay to the borrower(s)/ legal heir(s). Further, where the borrower(s)/ legal heir(s) has not approached the lender for release of pledged eligible collateral after full repayment or settlement of loan, the lender shall issue periodic reminders to borrower(s)/ legal heir(s) through letters, email or SMS if the email and mobile number are registered with the lender.

47. The compensation provided under these Directions shall be without prejudice to the rights of a borrower to get any other compensation as per any applicable law.

Unclaimed Gold and Silver collateral

48. The pledged gold or silver collateral lying with a lender beyond two years from the date of full repayment or settlement of loan shall be treated as unclaimed. A lender shall periodically undertake special drives to ascertain the whereabouts of the borrower(s)/ legal heir(s) in respect of such unclaimed gold and silver collateral.

49. A report on unclaimed gold and silver collateral shall be put up to the Customer Service Committee or the Board, as the case may be, at half-yearly intervals for a review.

H. Other Instructions

50. A lender shall refrain from issuance of misleading advertisements containing unrealistic claims to promote loans against gold or silver collateral.

51. A lender shall ensure that all arrangements for sourcing and/ or recovery of loans against eligible collateral, are in compliance with applicable guidelines on outsourcing and recovery practices.

52. A lender shall generally disburse loans into borrower’s bank accounts. All lenders shall comply with the Master Direction – Know Your Customer (KYC) Directions, 2016 as updated from time to time. Provisions of Sections 269 SS and 269 T of the Income Tax Act, 1961, and associated rules shall be complied with, as may be applicable.

53. In case of bank transfers, the lender shall ensure that:

1. Loan disbursals are made to the borrower’s account and not to a third-party account⁸; and
2. Loan servicing, repayment, etc. is executed by the borrower directly in the lenders’ bank account without any pass-through account or pool account of any third party.

54. Running multiple loans simultaneously to a single borrower or a group of related borrowers may be prone to misuse and susceptible to fraud. Consequently, such practices shall be subject to stricter internal audit and supervisory examination.

I. Disclosures, Repeal and Amendments

55. A lender shall disclose in its notes to accounts the amounts and percentage of loans extended against eligible collateral, separately for gold and silver collaterals, for both income generating as well as consumption purposes, to its total loans as per the format prescribed in Annex 1.

56. Circulars mentioned in Annex 2 shall stand repealed from the effective date of these Directions.

Annex 2

List of Circulars repealed with the Issuance of these Directions

(India CSR)