Archive · 20 Nov 2025
RBI's New Gold Loan Norms Pose Risks to Lenders Amid Rising Prices
New rules from the Reserve Bank of India (RBI) about gold loans are making it riskier for lenders, especially with gold prices going up.
Lenders need to keep a close eye on their loans and follow the rules carefully to avoid problems.
RBI's new gold loan guidelines classify loans into consumption and income-generating categories
High gold price volatility and increased LTV ratios pose risks to recent originations
Lenders must monitor LTV in real-time, factoring in accrued interest, and swiftly address any risk build-up
Gold loan NBFCs shifting to income-generating loans (IGLs) due to rising gold prices, increasing risk
Lenders should tighten IGL policies, cap LTVs, and follow regulations regarding accrued interest
- Who
- Gold loan lenders, especially non-banking financial companies (NBFCs)
- What
- Face risks due to new RBI gold loan guidelines and rising gold prices
- When
- Currently, with gold prices rising over the past 24 months
- Where
- India
- Why
- Due to increased loan-to-value (LTV) ratios and potential gold price volatility
Lenders' Perspective
Regulators' Perspective
LTV Calculation
Lenders' Perspective
Lenders interpret regulations to offer non-bullet CLs with higher LTVs
Regulators' Perspective
Regulators emphasize following regulations regarding accrued interest in LTV calculations
Gold Price Volatility
Lenders' Perspective
Lenders worry about increased risk with higher LTVs and potential gold price volatility
Regulators' Perspective
Regulators monitor lender portfolios in case of similar volatility with higher LTV levels
- New Loan Categories
- Consumption Loans (CLs) and Income Generating Loans (IGLs)
- Maximum LTV Ratio
- 85% for non-bullet loans, with interest not included in LTV calculation
- Gold Price Risk Reduction
- Pricing gold based on the lower of 30-day IBJA price average or current price
- Gold Weight Adjustment
- Considering reduced gold weight for impurities
- Gold Price Increase
- 100% in the past 24 months, allowing higher LTVs for income-generating loans
