RBI MPC 2025: Comprehensive Guidelines For Gold Loans To Be Announced Soon

Reserve Bank of India (RBI) Governor Sanay Malhotra has announced that the central bank will soon issue comprehensive guidelines for gold loans in an effort to harmonise the processes across various types of entities.

He said in a statement: “Loans against the collateral of gold jewellery and ornaments, commonly known as gold loans, are extended by regulated entities for both consumption and income-generation purposes. In order to harmonise guidelines across various types of regulated entities, to the extent possible, keeping in view their differential risk-bearing capabilities, we shall issue comprehensive regulations on prudential norms and conduct related aspects for such loans.”

The guidelines are expected to streamline the rules and processes where all lenders, including banks, and non-banking financial companies (NBFCs), and others follow the same practices.

At present, the rules vary among different entities leading to ambiguous practices and increased risks for both borrowers and lenders.

No Tightening, Only Harmonisation

In the wake of the significant rise in gold loans and related non-performing assets (NPAs), RBI has been contemplating stricter regulations for these types of loans.

However, Malhotra clarified that he “never said tightening in… statement with regard to gold loan guidelines.”

“Let’s wait for the guidelines on gold loans. Will be issued soon,” he said.

Gold Loan And NPAs

Gold loans have grown by around 50 per cent since September 2024, outpacing the growth of all other loans. However, it has also led to a rise in growth of NPAs in gold loans.

In February this year, Union Minister of Finance Nirmala Sitharaman also highlighted this in a reply in Parliament. She said gross NPA in gold loans increased by 18.14 per cent in banks and upper and middle-layer NBFCs between March 2024 and June 2024.

To deal with the rising NPA in gold loans, RBI directed the gold loan lenders in September 2024 to perform proper checks, such as borrowers’ repayment capacity, and gold ownership, and also identify gaps. It also asked lenders to monitor third-party service providers. In addition to it, it also stipulated the loan-to-value (LTV) ratio of 75 per cent.

RBI has even asked the lenders to review their gold loans given in the last two years, from January 1, 2022, to January 31, 2024.

Amid market volatility, gold prices continue to rise. “Gold prices continued to strengthen and reached new heights every month in 2025 till March,” RBI added in its monetary policy committee (MPC) report.

High prices are one of the reasons behind the growth in gold loans, as higher the gold value, the more is the loan amount, based on the loan-to-value (LTV) against the gold pledged.

Effects Of The Guidelines

AM Karthik, senior vice president and co-group head, ICRA said: “While we await the details, guidelines to harmonise gold loan practices across lenders augurs well for the segment, given the sharp growth in loan book driven by the gold prices and favourable demand dynamics, as unsecured and personal credit slowed since H2 FY2024. With gold prices elevated at present and the currently favourable risk profiles of the NBFCs in this space, considering the liquid nature of the security, the near-term impact on account of regulatory tightening should be manageable. However, competitive pressures for NBFCs could increase going forward.”