The Reserve Bank of India (RBI) has introduced new guidelines for gold loans in 2025, impacting both borrowers and lenders. These guidelines aim to increase transparency, security, and accessibility in the gold loan process. Here are ten significant changes borrowers and lenders should be aware of:

1. Tiered Loan-to-Value (LTV) Ratios: The RBI has implemented a tiered LTV ratio system. Gold loans up to INR 2.5 lakh can have an LTV of up to 85%, increased from the previous 75%. Loans between INR 2.5 lakh and INR 5 lakh are capped at 80%, while loans exceeding INR 5 lakh are limited to 75%.

2. Standard LTV Ratio: For standard gold loans, the LTV ratio is capped at 75%. This means that for gold valued at ₹1,00,000, the maximum loan amount is ₹75,000.

3. Real-Time Gold Rates: Lenders must use real-time gold rates from authorized and regulated sources to calculate the loan amount. This ensures fair valuation based on current prices.

4. Mandatory Purity Check: Lenders, especially NBFCs and banks, are required to validate the purity of pledged gold through BIS-certified assaying centers. This prevents undervaluation and ensures borrowers receive fair loan amounts based on accurate purity assessments.

5. Digital Gold Loan Encouragement: The RBI is promoting digital gold loan services, enabling borrowers to complete the entire loan process online, from application to disbursal. Video KYC is accepted for both new and existing customers, which is beneficial for those in rural areas.

6. Transparency in Interest Rates and Charges: Financial institutions must clearly display all interest rates, processing fees, and other charges on their websites and in branches to ensure borrowers are well-informed and can compare offers.

7. Collateral Restrictions: Loans can only be granted against gold jewelry, ornaments, and specially minted gold coins (22 carats or higher) sold by banks. Gold ETFs, mutual fund units, raw gold, and bullion are not accepted as collateral.

8. Limits on Gold Pledges: Borrowers can pledge up to 1 kg of gold ornaments, with a maximum of 50 grams in gold coins per borrower to reduce excessive borrowing.

9. No Repledged or Disputed Gold: Lenders cannot offer loans against gold already pledged elsewhere or if there are doubts about its ownership.

10. Prompt Collateral Release: Gold pledged as collateral must be returned to the borrower within seven working days after loan repayment.

These new guidelines aim to protect borrowers, promote responsible lending, and improve the overall stability of the gold loan market. While compliance costs for NBFCs and banks may increase, the reforms are expected to strengthen asset quality, reduce defaults, and enhance market credibility. Borrowers should understand their eligibility, repayment terms, and total costs before taking a gold loan.