Hyderabad: Gold loans have become a popular option for people to meet their financial needs. From medical emergencies, education, business, to agriculture, borrowers turn to gold loans for instant liquidity. However, the Reserve Bank of India (RBI) has introduced strict new regulations for gold loans under the 2025 draft guidelines, bringing significant changes that borrowers must carefully consider.
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Stricter Repayment Periods Introduced
Under the new RBI guidelines:
- The maximum repayment period is capped at 12 months for bullet repayment schemes.
- EMI-based loans can have a tenure of up to 36 months.
- Earlier, gold loans could be renewed annually, but this provision has now been scrapped.
- If repayment is not completed within 12 months, both principal and interest must be cleared before applying for a new loan.
Revised Loan-to-Value (LTV) Ratio
RBI has maintained the LTV ratio at 75%, meaning borrowers can receive loans up to 75% of the gold’s market value. Transparency has been mandated for gold valuation and auction processes if the borrower defaults.
Renewals Come With Conditions
For renewal of loans:
- The loan account must be classified as ‘Standard.’
- All due interest must be cleared.
- A fresh credit assessment is required before renewal.
Key RBI Guidelines Highlights
- Borrowers failing to repay will have their gold auctioned after due notification.
- Gold valuation and auction must follow transparent procedures.
- These changes aim to protect borrowers but could increase financial pressure due to tighter repayment timelines.
Bank-Wise Comparison of Gold Loan Rates & Terms
Bank of Baroda (BOB)
- Interest Rate: 8.85% – 9.6% (Agri loans start from 8.85%)
- Tenure: 12 months (bullet), 36 months (EMI)
- Processing Fee: Nil for loans up to ₹3 lakh; 0.50% above ₹3 lakh
- Speciality: Low processing fees, favorable rates for agriculture
State Bank of India (SBI)
- Interest Rate: 8.75% – 9.45%
- Tenure: 12 months (bullet), 36 months (EMI)
- Processing Fee: 0.50% + GST
- Speciality: Fast processing, minimal documentation
HDFC Bank
- Interest Rate: 8.50% – 9.90%
- Tenure: 12 months (bullet), 24-36 months (EMI)
- Processing Fee: 0.50% – 1% + GST
- Speciality: Digital gold loan facility
ICICI Bank
- Interest Rate: 8.75% – 9.50%
- Tenure: 12 months (bullet), 36 months (EMI)
- Processing Fee: 0.50% – 1% + GST
- Speciality: Flexible loans for personal needs
Canara Bank
- Interest Rate: 8.85% – 9.25%
- Tenure: 12 months (bullet), 36 months (EMI)
- Processing Fee: 0.50% + GST
- Speciality: Beneficial for agriculture and personal loans
Borrowers Advised to Compare Before Borrowing
Before availing gold loans:
- Compare interest rates, processing fees, and repayment flexibility among different banks.
- Assess your repayment capability to avoid default.
- Consider the total repayment amount, including EMI, interest, and tenure.
- Failure to repay may result in the loss of pledged gold and additional financial distress.