The RBI’s Lending Against Gold and Silver Collateral Directions, 2025 were issued on 6 June 2025 with compliance required by 1 April 2026. They change how much can be borrowed against a given weight of gold, and on bullet-repayment loans they change it by more than the headline percentage suggests.
The gold loan LTV calculator above applies the tiers and the maturity-inclusive rule. Everything below is dated 2026-09-03, and the primary Directions text is the authority on any specific question.
The three tiers
The loan to value ceiling now depends on the size of the loan:
| Loan amount | Maximum loan to value |
|---|---|
| Up to ₹2,50,000 | 85% |
| Above ₹2,50,000 and up to ₹5,00,000 | 80% |
| Above ₹5,00,000 | 75% |
The tier is determined by the loan amount, not by the collateral value, so crossing a boundary lowers the ceiling on the whole loan rather than on the excess. That produces a step at each threshold. A borrower who could take ₹2,50,000 at 85% and wants a little more moves into the 80% band for the entire amount, which means more gold is needed for the increase than the increase alone would suggest.
Maturity-inclusive LTV: the rule that bites hardest
Most gold loans in India are bullet-repayment: nothing is paid during the tenure and the principal plus accumulated interest is settled at the end. For those loans, the LTV is computed on the total amount due at maturity, including accrued interest, rather than on the amount disbursed.
The consequence is that the interest has to fit under the ceiling alongside the principal.
Take 50 grams of 22 carat gold at a reference price of ₹9,000 a gram. The collateral value is ₹4,50,000, which puts the loan in the 80% tier, so the ceiling is ₹3,60,000.
- On an EMI loan, the maximum principal is ₹3,60,000, because the LTV applies to the principal outstanding, which falls with each instalment.
- On a 12-month bullet loan at 10.5%, the principal plus the interest that will accrue over 12 months must together stay under ₹3,60,000. The disbursable principal falls to roughly ₹3,26,000, and the effective LTV against the collateral value is about 72.4%, not 80%.
That is nearly eight percentage points of borrowing capacity that a calculator applying the headline tier would report as available. On a longer tenure or a higher rate the gap widens further, which is exactly why the rule exists.
Maintained through the tenure, not just at origination
The Directions require the LTV to be maintained throughout the tenure. Under the older practice, the ratio was tested when the loan was made and not revisited.
Two forces push the ratio upward during a bullet loan. The amount due rises every month as interest accrues. And the collateral value moves with the gold price, which can fall.
Where the ratio breaches the ceiling, the lender can call for additional collateral or a part-repayment. That is a margin call, and it is a risk that did not previously sit on a gold loan borrower in the same way. A loan drawn right at the ceiling has no buffer; one drawn well below it can absorb a price fall.
The practical reading is that the headroom between the amount borrowed and the tier ceiling is not spare capacity left on the table. It is the cushion against a margin call.
The 12-month bullet cap and renewals
Bullet-repayment gold loans must be repaid within 12 months. Renewal or a top-up is permitted only for standard accounts, and only after the accrued interest has been cleared.
Both conditions matter to the common pattern of rolling a gold loan forward indefinitely. Under the new framework a roll requires the account to be standard and the interest to be paid in cash at each renewal, so the interest can no longer simply be capitalised into a fresh bullet loan year after year.
Loans repaid by EMI are not subject to the 12-month cap, and their LTV is computed on the outstanding principal, which falls with each instalment. The choice between a bullet loan and an EMI loan is therefore also a choice about how much can be borrowed and for how long.
Purity, weight and the reference price
The value against which the LTV is applied depends on the gold content, so purity scales the whole calculation.
Fifty grams of 18 carat is worth about 18/22 of fifty grams of 22 carat at the same reference price: ₹3,68,182 against ₹4,50,000 in the example above. That drop moves the loan from one tier to another in some cases and reduces the eligible amount in every case.
Two further points on valuation. The reference price is the lender’s, based on the metal, and it is not the retail jewellery price. Making charges, wastage and retail margin form a large part of what an ornament costs to buy and none of it is collateral value. And stones, gems and non-gold components are excluded from the assessment, so a heavily stone-set ornament weighs more than it values.
The calculator takes grams, carat and a price per gram of 22 carat, and reports where a desired amount falls short and by how many grams.
Release of the pledged gold
The Directions require pledged gold to be released within 7 working days of the loan being closed, with a penalty of ₹5,000 per day for delay.
That is a borrower protection with a practical consequence for anyone contemplating a transfer, because a transfer requires the ornaments to be physically released by one lender and re-pledged with another. The release timeline is now bounded, which makes the logistics more predictable than they were, though it does not make them free.
Why a gold loan transfer rarely pays
Gold loan balance transfer exists as a product. Bajaj Finance, Muthoot, Manappuram, IIFL and several banks offer it. The arithmetic seldom supports it, and the reason is structural rather than incidental.
The tenure is short. A gold loan runs three to twelve months. A rate cut of even three percentage points on ₹3,00,000 over a six-month remaining tenure saves roughly ₹4,500 in gross interest.
The fees are not short. A processing fee of 0.25% to 2%, or a flat ₹500 to ₹1,500, plus 18% GST. A revaluation or assaying fee at the new lender of ₹250 to ₹1,000. On ₹3,00,000 at 1%, that is ₹3,000 plus ₹540 of GST plus a valuation, against ₹4,500 of gross saving.
Exit is not always free. Foreclosure at the old lender is typically 0% to 2%, and many NBFCs waive it after a short lock-in of a few days to a month. Where it applies at 2%, it exceeds the entire saving on its own.
The RBI 2026 prepayment rule does not help. Gold loans are predominantly fixed-rate, and the (Pre-payment Charges on Loans) Directions, 2025 cover floating-rate loans sanctioned or renewed on or after 1 January 2026. Both limits are set out on the RBI prepayment rules page.
The gold moves. Ornaments are released by one lender and re-pledged with another, which is a physical transaction with a timeline attached rather than a paperwork exercise.
Where a rate is genuinely out of line, and Bajaj Finance quotes a band of 9.50% to 24% a year, there is a real gap to attack. But the honest arithmetic on a short tenure usually points somewhere else: clearing the loan if the cash is available, or moving to an EMI structure at the same lender, which under the new rules also lifts the effective LTV compared with a bullet loan.
What to check before borrowing against gold
The tier the intended loan amount falls into, since crossing a threshold lowers the ceiling on the whole loan. Whether the loan is bullet or EMI, since that determines whether accrued interest eats into the ceiling. The headroom left below the ceiling, since it is the buffer against a margin call rather than unused capacity. The assessed purity and weight, excluding stones. And the renewal terms, since interest has to be cleared in cash before a bullet loan can be rolled.
Common questions
What are the LTV tiers?
Under the RBI Lending Against Gold and Silver Collateral Directions, 2025, issued 6 June 2025 with compliance required by 1 April 2026, the loan to value ceiling is 85% for loans up to ₹2.5 lakh, 80% for loans above ₹2.5 lakh and up to ₹5 lakh, and 75% above ₹5 lakh. The tier is set by the loan amount, so crossing a boundary lowers the ceiling on the whole loan.
What does maturity-inclusive LTV mean on a bullet loan?
For bullet-repayment loans, the LTV is computed on the total amount due at maturity, principal plus accrued interest, rather than on the amount disbursed. Because interest has to fit under the same ceiling, the disbursable principal is lower. On 50 grams of 22 carat gold at ₹9,000 a gram over 12 months at 10.5%, the effective LTV against the collateral value works out at about 72.4% rather than the headline 80%.
Do gold loans have a maximum tenure now?
Bullet-repayment gold loans must be repaid within 12 months. Renewal or a top-up is permitted only for standard accounts and only after the accrued interest has been cleared. Loans repaid by EMI are not subject to that 12-month bullet cap, and the LTV on them is computed on the outstanding principal rather than on a maturity figure.
What happens if the gold price falls during the loan?
The LTV must be maintained throughout the tenure, not only at origination. If the collateral value falls far enough that the ratio breaches the ceiling, the lender can call for additional collateral or part-repayment. This is a genuine risk on a bullet loan drawn near the ceiling, because the amount due is rising with accrued interest while the collateral value may be falling.
How is purity handled?
The value is assessed on the gold content, so lower-carat ornaments are worth proportionately less. Fifty grams of 18 carat is worth about 18/22 of fifty grams of 22 carat at the same reference price. The reference price used is the lender's, and it is not the retail jewellery price, which includes making charges and margins that carry no collateral value.
Is a gold loan balance transfer worth doing?
The arithmetic rarely supports it. Tenures are short, often three to twelve months, so a rate cut of even a few percentage points yields a small absolute figure, while a processing fee of 0.25% to 2% or a flat ₹500 to ₹1,500 plus GST, and a revaluation or assaying fee of ₹250 to ₹1,000 at the new lender, are payable regardless. The physical release and re-pledge of the ornaments adds a practical cost on top.
Sources
- IIFL, key updates to gold loan guidelines for borrowers under the RBI Lending Against Gold and Silver Collateral Directions, 2025: tiered LTV of 85% up to Rs 2.5 lakh, 80% for Rs 2.5 to 5 lakh and 75% above Rs 5 lakh, LTV maintained throughout the tenure, bullet loans computed on total amount due at maturity, 12-month bullet repayment cap, release of pledged gold within 7 working days of closure with a Rs 5,000 per day penalty for delay (secondary source), retrieved 2026-09-03.
- Kosamattam Finance, RBI gold loan rules 2026 (Directions issued 6 June 2025, compliance by 1 April 2026, tiered LTV, maturity-inclusive computation for bullet loans, renewal and top-up only for standard accounts after clearing accrued interest) (secondary source), retrieved 2026-09-03.
- Upstox learning centre, RBI gold loan rules 2026 explained (LTV tiers, margin maintenance through the tenure, bullet loan treatment) (secondary source), retrieved 2026-09-03.
- Muthoot Finance, how to transfer a gold loan from your current bank to another bank (transfer mechanics, release and re-pledge of ornaments) (secondary source), retrieved 2026-09-03.
- Bajaj Markets, gold loan balance transfer product page (transfer offered; gold loan rates quoted in a 9.50% to 24% per year band at Bajaj Finance) (secondary source), retrieved 2026-09-03.
- Reserve Bank of India (Pre-payment Charges on Loans) Directions, 2025, RBI/2025-26/64, issued 2 July 2025 (floating-rate loans only; gold loans are predominantly fixed-rate and short-tenure, so they sit outside), retrieved 2026-09-03.