Small gold mortgage LTV elevated to 85% from 75%

A gold pledging transaction in progress within the metropolis of Kochi. File photograph
| Picture Credit score: The Hindu
The Reserve Financial institution of India (RBI) has determined to extend the mortgage to worth (LTV) quantity for small gold loans of as much as ₹2.5 lakh from one borrower from 75% to 85% together with curiosity, RBI Governor Sanjay Malhotra mentioned on Friday.
He mentioned the ultimate instructions on loans given towards gold as collateral can be issued on Friday or on Monday.
“To start with the route was solely a draft, it was not ultimate. There may be nothing new within the draft route, it’s a consolidation of previous rules and we now have recreated it. It was noticed that some regulated entities (REs) weren’t implementing it as a result of it lacked readability. As a result of now all the pieces is in black and white, that’s the reason we now have been getting feedback,” the governor mentioned.
He mentioned the draft makes it clear that on the absence of bill, one can provide a self-declaration and there was no want to fret in that entrance. Extra readability might be offered on the ultimate route as and when it’s revealed, he mentioned.
“On credit score appraisal, it is not going to be relevant for small loans of upto Rs 2.5 lakh if gold is pledged. Finish use will solely be monitored if profit is being taken below precedence sector lending,” he clarified.
He mentioned the LTV components might be relevant on consumption loans and never on others.
“Immediately LTV is 75%. For small loans we now have elevated it to 85% together with curiosity for loans beneath Rs 2.5 lakh per borrower,” he mentioned.
Revealed – June 07, 2025 09:01 am IST