RBI’s New Gold Loan Norms To Enhance Lending Flexibility For NBFCs: Crisil Ratings

New Delhi, Jun 14 (KNN) Gold loan-focused non-banking financial companies (NBFCs) are expected to see a boost in business momentum following the Reserve Bank of India’s (RBI) revised framework on gold loans, according to a note by Crisil Ratings.

The updated guidelines, which come into effect from April 1, 2026, raise the loan-to-value (LTV) ratio ceiling and alter the method of LTV calculation for bullet repayment loans. 

Under the new rules, lenders must consider the accrued interest payable at maturity in addition to the original loan amount while calculating LTV. 

Despite this change, Crisil notes that the higher LTV cap will offer a greater buffer for lenders to remain within regulatory thresholds.

“For bullet loans, the LTV at the time of disbursement could rise from the current 65–68 percent range to as high as 70–75 percent,” the report stated. 

This provides gold loan NBFCs more headroom for lending, especially in the sub-Rs 5 lakh segment, which accounts for nearly 70 percent of their portfolio.

Malvika Bhotika, Director, Crisil Ratings, highlighted two key benefits of the revised framework. “The changes will offer NBFCs a higher cushion to comply with LTV norms even after accounting for accrued interest, and they will also have additional lending flexibility,” she said.

However, Bhotika also cautioned that higher LTV disbursements could reduce the buffer available to absorb fluctuations in gold prices. 

“This underscores the need for tighter risk management practices and timely auctions to mitigate potential losses,” she added.

The RBI’s move is seen as a regulatory alignment aimed at enhancing credit access while ensuring prudential safeguards in the fast-growing gold loan segment.

(KNN Bureau)