On June 6, the Reserve Bank of India (RBI) made a game-changing announcement for anyone who’s ever taken a gold loan or might need one soon.
- For gold loans up to ₹2.5 lakh, the Loan-to-Value (LTV) ratio is now 85%
- For gold loans above ₹2.5 lakh, the LTV remains 75%
That means if you need a small gold loan, you can now get more money for the same gold.
Sounds simple, right? But it’s actually a huge relief for middle-class families and everyday folks who rely on gold loans when there’s nowhere else to turn.
Quick Refresher: What’s LTV in a Gold Loan?
LTV (Loan-to-Value) is just a fancy term for how much loan money you get compared to your gold’s worth.
Example:
Let’s say your gold is valued at ₹2,00,000.
- At 75% LTV (old rule), you’d get ₹1,50,000
- At 85% LTV (new rule), you get ₹1,70,000
That’s ₹20,000 more in your hand—instantly. When you’re in a crunch, that can be the difference between stress and survival.
Who Benefits Most from This Change?
This isn’t just a random policy shift. It’s a direct response to the needs of small borrowers—people like:
- A single mother needing money for her kid’s school admission
- A father trying to cover emergency medical expenses
- A young couple facing a short-term cash crunch
This move helps you avoid falling into the trap of unlicensed moneylenders who often charge insane interest rates.
Now, you can walk into a bank or trusted gold loan company and get more help—without extra risk.
What Are Banks Saying?
Initially, many bankers had concerns. When RBI released the draft version of this rule back in April, experts worried it might make gold loans riskier for lenders.
Some feared it would push cautious lenders to cut back on approvals—making things tougher for the very people the rule aimed to help.
But now that the final version is out—with clear limits and relief only for smaller loans—banks are warming up to the idea.
RBI’s Smart Move: Keeping Bigger Loans Safer
RBI hasn’t gone all-out. They’ve only raised the LTV for gold loans up to ₹2.5 lakh. This keeps larger loans at the old 75% cap, protecting banks and borrowers alike.
So if someone wants a ₹5 lakh gold loan? The rules don’t change—they’ll still get up to ₹3.75 lakh as per usual.
This balance ensures:
- Small borrowers get more support
- Lenders stay protected from risky defaults
Quick Recap – What You Need to Know
| Gold Loan Amount | LTV Ratio | What It Means for You |
|---|---|---|
| Up to ₹2.5 lakh | 85% | Get more money for the same gold! |
| Above ₹2.5 lakh | 75% | No change – same as before |
How to Take Advantage of the New Gold Loan Rule (Step-by-Step)
- Check your gold’s value – Visit a trusted lender or jeweller.
- Estimate your loan amount – Multiply the gold value by 85% (if under ₹2.5 lakh).
- Compare lenders – Some gold loan companies offer better terms and faster disbursement.
- Apply with documents – Usually just ID, address proof, and your gold.
- Get funds quickly – Most loans are processed within hours!
FAQ – You Asked, We Answered
1. Can I get 85% LTV from any gold loan provider?
Yes, but only if your loan is ₹2.5 lakh or less. Not all lenders may offer it right away—so it’s best to check first.
2. Will this increase my loan EMI or interest?
Nope. The loan amount goes up, not the interest rate. Your EMI depends on your total borrowed amount and tenure.
3. Is it safe to take a gold loan?
Absolutely—if you go through a bank or RBI-registered NBFC. Never give your gold to local lenders or shady brokers.
4. Can I use this loan for any purpose?
Yes! Whether it’s medical, school fees, home repairs, or travel—you can use it however you need.
5. What if I miss a payment?
You’ll be charged a penalty, and eventually, your gold may be auctioned. But most lenders offer flexible options—talk to them before you default.