In a major decision aimed at providing greater credit access to small borrowers, the Reserve Bank of India (RBI) has increased the loan-to-value (LTV) ratio on gold loans up to ₹2.5 lakh from 75% to 85%. This means borrowers can now get up to 85% of the gold’s market value as a loan.
For gold loans between ₹2.5 lakh and ₹5 lakh, the LTV ratio has been fixed at 80%, while for loans above ₹5 lakh, the existing limit of 75% will continue.
RBI Governor Sanjay Malhotra clarified that the new LTV calculation will also include the interest component of the loan. These changes are set to come into effect from April 1, 2026.
The move is seen as a relief for small borrowers, especially those in rural and semi-urban areas who rely heavily on gold loans during financial distress.
