Loan-to-Value (LTV) ratio

The Reserve Bank of India (RBI) has revised the Loan-to-Value (LTV) ratio for gold loans, allowing lenders to offer higher loan amounts against gold collateral. The new norms will be effective from April 1, 2026.

Revised Gold Loan LTV Limits:

Loan Amount	Maximum LTV Ratio
Up to ₹2.5 lakh	85% (up from 75% in draft norms)
₹2.5 lakh – ₹5 lakh	80%
Above ₹5 lakh	75%

What is LTV Ratio?

• The Loan-to-Value (LTV) ratio represents the outstanding loan amount (including accrued and unrealised interest) as a percentage of the value of the collateral (gold).
• A higher LTV allows borrowers to get more money against the same gold.

Additional Guidelines:

• No loans or advances will be allowed against:
  • Primary gold or silver
  • Financial assets backed by gold/silver, such as:
    • Gold ETFs (Exchange-Traded Funds)
    • Mutual Fund units linked to gold

Implications:

• NBFCs (Non-Banking Financial Companies) can now lend more against the same amount of gold, which is expected to:
  • Boost loan disbursements
  • Attract more borrowers
  • Enhance earnings growth for gold financing institutions
• The move is seen as a stimulus for retail lending, especially in semi-urban and rural areas where gold-backed loans are a popular form of credit.