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Gold Loan Firms Seek Tier I Capital Requirement Parity
Gold loan companies lend money to people who leave gold jewellery as security.
These companies must keep a certain amount of their own capital to support their lending.
Their minimum Tier I capital requirement is 12%, while it is 10% for some other NBFCs.
Gold loan companies want the requirement lowered to 10%.
They say gold is valuable collateral that can be sold to recover a loan if needed.
An industry expert says the change could let companies use more Tier II funding.
The overall capital requirement would still be 15%.
Loans against jewellery grew faster in July 2026 than in July 2025.
Gold loan companies want their minimum Tier I capital requirement reduced from 12% to 10%, matching other NBFCs.
NBFCs, including gold loan companies, must maintain an overall capital-to-risk-weighted-assets ratio of 15%.
Industry officials argue gold-backed loans have liquid collateral, loan-to-value limits and relatively straightforward recovery.
V Vishwanathan said parity could let gold loan companies rely more on Tier II funding rather than repeatedly raising Tier I capital.
Loans against jewellery grew 68.5% year over year in July 2026, compared with 43.9% growth in July 2025.
- Who
- Gold loan companies are seeking a change to their Tier I capital requirement.
- What
- They want the minimum requirement reduced from 12% to 10%, in line with other NBFCs.
- Where
- Not stated.
- When
- The article was published on October 5, 2026; it also cites loan growth in July 2026 and July 2025.
- Why
- The companies say parity could lower their capital costs and help them extend more credit to underserved customers.
Key facts
- Current minimum Tier I requirement for gold loan companies
- 12%
- Minimum Tier I requirement for other NBFCs
- 10%
- Overall minimum CRAR for NBFCs
- 15%
- Industry proposal
- Reduce gold loan companies’ minimum Tier I requirement to 10%
- Jewellery-backed loan growth, July 2026
- 68.5% year over year
- Jewellery-backed loan growth, July 2025
- 43.9% year over year
- Publication date
- October 5, 2026
Quotes
CEO of a gold loan company
An unnamed chief executive of a gold loan company.
“There is a need for examining whether the current risk weighting and capital requirements for gold loans appropriately reflect the actual collateral and recovery characteristics of the asset. For NBFCs, the Tier 1 capital requirement applicable to gold-loan assets has historically been higher than for some other categories of NBFCs. The industry view is that this differential deserves to be reviewed.”
thehindubusinessline.com
“So, if the minimum Tier-I capital requirement reduces to 10 per cent (from the current 12 per cent) and the headroom for Tier-II capital proportionately increases within the overall CRAR of 15 per cent, GLCs will be encouraged to expand their risk-weighted assets (loans).”
thehindubusinessline.com
Sources
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