Can Borrowers Expect Stricter Gold Loan Rules In 2026? — Complete Guide

Record demand for gold loans in 2024 forced the Reserve Bank of India to publish new rules in April 2025 that changed how lenders must calculate the loan to value ratio and assess jewellery.

Many families turned to gold loans in 2024 when cash needs grew fast. This created confusion in banks about purity checks and loan limits. The RBI addressed this with its April 2025 draft called Lending Against Gold And Silver Collateral Directions. Its goal was to simplify gold loan and LTV calculation rules before the 2026 cycle.

Are These New Rules A Direct Response To Rising Pressure In 2024?

The new push began when the RBI noted steady pressure on bank branches during 2024. The RBI report titled Trends And Progress Of Banking In India 2024 recorded the gold loan book of scheduled commercial banks at 1.11 lakh crore rupees. This figure showed the scale of lending that needed clear checks.

The draft Directions published on 9 April 2025 demanded uniform rules. Banks and NBFCs must convert all jewellery into 22-carat value before setting the 75 percent loan to value limit. The Directions also fixed a seven-working-day window for lenders to release pledged jewellery after repayment. These updates marked the first major reset in four years.

What LTV Means And How It Must Be Applied?

The LTV ratio is the share of a loan against the value of the pledged gold. This value depends on purity, weight, and metal content. Jewellery must first be checked by assaying, then converted into a 22-carat standard. Lenders must remove weights of stones or parts that are not gold. Only then can they apply the 75 percent ceiling.

These elements form the base of all valuation practices. Before the table below, it helps to note that these standards come directly from RBI rulebooks and draft Directions. These rules ensure every lender uses the same method. 
 

This reduces disputes and creates one national process.

Concerns raised in earlier years link closely to these new steps. In 2025, an article by Loansjagat highlighted rising complaints about gold auctions and delayed release of pledged jewellery.  That article argued for stricter timelines and better purity checks. The RBI appears to have moved in that direction in 2025 by ordering stronger documentation and transparency.

This update sits within a longer chain of policy shifts by banks and the Government.

How Banks And The Government Responded In Previous Years

The pattern of movement in gold loan controls is clear when viewed across years.

In August 2020, the RBI allowed banks to lend up to 90 percent LTV for business credit during pandemic stress. This came through RBI Circular DOR.No.STR.REC.11/21.04.048/2020-21. 

By March 2021, the RBI withdrew this relaxation and restored the standard 75 percent ceiling through a formal press release. The Status Paper On Government Debt 2023recorded that temporary relaxations in secured credit categories are always withdrawn after stress reduces.

Position Of RBI On LTV Rules Across Years
 

This history shows how lending norms tighten and relax based on economic needs. The next part reviews how these rules may shape borrower choices in 2026.

What Borrowers Can Expect In 2026?

The 2026 cycle will run on strict valuation. Assaying will be compulsory. Purity certificates will be standard. Bullet repayment loans will carry a 12-month cap. Every branch must record purity, weight, deductions and storage details.

The RBI Annual Report 2023-24 noted more complaints about delayed release of pledged items. The new seven-day limit aims to fix this.

A new change takes effect in April 2026. The draft Directions allow silver ornaments as collateral if they meet purity norms. This may help households that do not own gold.

Conclusion 

The gold loan and LTV calculation rules now rest on clear checks and fixed limits. The 2025 draft, supported by RBI reports and Government documents, prepares lenders and borrowers for a more uniform system in 2026. 

The framework aims for cleaner valuation, faster release timelines and steady credit discipline across the sector.