Brief Overview:
New harmonised directions on loans against gold and silver are out. The regulated entities including banks and NBFCs are required to comply with these directions by 1st April 2026.
Technical Details:
1) The directions categorise gold loans as ‘income generating’ and ‘consumption’ loans based on their end-use for customers.
2) LTV ratio in respect of consumption loans amounting to lesser than INR 5 Lakhs has been increased.
3) Lenders shall not avail loans by re-pledging gold / silver collateral.
4) Standardisation of documentation for availing loans against gold across all branches of a lender.
5) The lender shall release the pledged collateral to the borrower on the same day, and in any case, within seven working days of full loan repayment or settlement.
6) Credit policies to be maintained by lenders to provide the single borrower limits and aggregate limits for loan portfolio against collateral of jewellery ornaments or coins.
7) No loan to be granted against primary gold or primary silver or financial assets backed by primary gold or silver.
8) Enforcement of pledged collateral to take place by way of auction.
9) Repair costs for any damage to pledged collateral during tenor of a loan to be borne by the lender.
Key Takeaways:
The directions are a one stop destination vis-à-vis regulations on lending against gold and silver for all regulated entities.
For further details, please see:
47NTEBC6E8C94DFB432797365CA984734797.PDF
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