Revised gold loan rules to squeeze margins, slow growth
April 03, 2026
India's gold loan sector is bracing for a sharp growth moderation and rising compliance costs as the RBI’s revised framework takes effect.
Lenders offering gold loans are bracing for margin pressure as tighter underwriting and documentation norms under Reserve Bank of India’s (RBI) revised gold loan framework are expected to raise compliance costs.
According to industry experts, some lenders could also see a sharp slowdown in growth due to operational adjustments and stricter renewal rules.
Industry players have already begun recalibrating their underwriting, documentation and monitoring practices in line with the revised framework, which took effect from April 1. IIFL Finance, for instance, said it had started aligning its processes ahead of the rollout.
“Our focus has been on strengthening credit assessment and repayment capacity evaluation, alongside tighter documentation and compliance frameworks,” said Manish Mayank, head of gold loan business, IIFL Finance.
While the lender sees the new guidelines as a positive step towards improving transparency and discipline in the sector, it also acknowledges a rise in compliance effort. “In the near term, lenders will need to recalibrate processes, especially around credit assessment, documentation, and monitoring across branch networks. While this adds to compliance effort, it is a necessary step towards building a stronger and more resilient ecosystem,” Mayank said.
Some lenders have flagged operational challenges. “Some near-term operational adjustments will be required, particularly around tighter timelines and process standardisation,” Umesh Mohanan, ED and CEO at Indel Money, said. He, however, added that these are constructive changes that will ultimately strengthen the gold lending ecosystem. Mohanan said the seven-day timeline for gold release and tighter process standards under the new guidelines will also require some recalibration.
Operational Hurdles
In June 2025, the RBI had issued comprehensive revised norms for loans against gold and silver jewellery, aimed at harmonising lending practices across banks, NBFCs, cooperative banks and housing finance companies. Under the new framework, consumption gold loans carry differentiated loan-to-value (LTV) caps based on ticket size and repayment structure. Bullet repayment loans of up to Rs 2.5 lakh can have LTVs of up to 85%, those between Rs 2.5 lakh and Rs 5 lakh up to 80%, and loans above Rs 5 lakh remain capped at 75%. LTV must be maintained through the loan tenure, including accrued interest. For income-generating loans, no explicit LTV ceiling has been prescribed, though lenders must ensure adequate collateral coverage.
Earlier this month, the Association of Gold Loan Companies sought a six-month deferment of the guidelines, citing heightened geopolitical uncertainty and potential risks to credit access, but the RBI did not budge.
A public sector banker said the key shift is that gold is now clearly treated as collateral rather than the primary basis for lending. For loans above Rs 2.5 lakh, banks must undertake detailed appraisal of repayment capacity, including scrutiny of income proofs and financial statements, where relevant. This, he said, could lead to moderation in portfolio growth as borrowers adjust to tighter norms. Renewals of bullet loans are now allowed only after servicing accrued interest, and depending on ticket size, fresh credit assessment, which lenders say may weigh on disbursement momentum in the near term.
Impact on Portfolio Growth
There are also operational gaps. While the RBI has eased restrictions for loans of up to Rs 2.5 lakh, lenders must undertake detailed credit assessment, including repayment capacity, for loans above that threshold.
AM Karthik, senior vice president and co-group head at ICRA, said borrowers may split loans among family or friends or diversify borrowings across multiple lenders to keep the assessed amount below Rs 2.5 lakh. “Disbursements and operational efficiencies could be impacted in the near term in view of increased operational requirements, especially in cases where the loan amount exceeds Rs 2.5 lakh,”
The rating agency expects gold loan growth for NBFCs to moderate to 17–19% in FY27, compared with an estimated 60–65% in FY26, citing operational adjustments and tighter renewal norms.
According to industry experts, some lenders could also see a sharp slowdown in growth due to operational adjustments and stricter renewal rules.
Industry players have already begun recalibrating their underwriting, documentation and monitoring practices in line with the revised framework, which took effect from April 1. IIFL Finance, for instance, said it had started aligning its processes ahead of the rollout.
“Our focus has been on strengthening credit assessment and repayment capacity evaluation, alongside tighter documentation and compliance frameworks,” said Manish Mayank, head of gold loan business, IIFL Finance.
While the lender sees the new guidelines as a positive step towards improving transparency and discipline in the sector, it also acknowledges a rise in compliance effort. “In the near term, lenders will need to recalibrate processes, especially around credit assessment, documentation, and monitoring across branch networks. While this adds to compliance effort, it is a necessary step towards building a stronger and more resilient ecosystem,” Mayank said.
Some lenders have flagged operational challenges. “Some near-term operational adjustments will be required, particularly around tighter timelines and process standardisation,” Umesh Mohanan, ED and CEO at Indel Money, said. He, however, added that these are constructive changes that will ultimately strengthen the gold lending ecosystem. Mohanan said the seven-day timeline for gold release and tighter process standards under the new guidelines will also require some recalibration.
Operational Hurdles
In June 2025, the RBI had issued comprehensive revised norms for loans against gold and silver jewellery, aimed at harmonising lending practices across banks, NBFCs, cooperative banks and housing finance companies. Under the new framework, consumption gold loans carry differentiated loan-to-value (LTV) caps based on ticket size and repayment structure. Bullet repayment loans of up to Rs 2.5 lakh can have LTVs of up to 85%, those between Rs 2.5 lakh and Rs 5 lakh up to 80%, and loans above Rs 5 lakh remain capped at 75%. LTV must be maintained through the loan tenure, including accrued interest. For income-generating loans, no explicit LTV ceiling has been prescribed, though lenders must ensure adequate collateral coverage.
Earlier this month, the Association of Gold Loan Companies sought a six-month deferment of the guidelines, citing heightened geopolitical uncertainty and potential risks to credit access, but the RBI did not budge.
A public sector banker said the key shift is that gold is now clearly treated as collateral rather than the primary basis for lending. For loans above Rs 2.5 lakh, banks must undertake detailed appraisal of repayment capacity, including scrutiny of income proofs and financial statements, where relevant. This, he said, could lead to moderation in portfolio growth as borrowers adjust to tighter norms. Renewals of bullet loans are now allowed only after servicing accrued interest, and depending on ticket size, fresh credit assessment, which lenders say may weigh on disbursement momentum in the near term.
Impact on Portfolio Growth
There are also operational gaps. While the RBI has eased restrictions for loans of up to Rs 2.5 lakh, lenders must undertake detailed credit assessment, including repayment capacity, for loans above that threshold.
AM Karthik, senior vice president and co-group head at ICRA, said borrowers may split loans among family or friends or diversify borrowings across multiple lenders to keep the assessed amount below Rs 2.5 lakh. “Disbursements and operational efficiencies could be impacted in the near term in view of increased operational requirements, especially in cases where the loan amount exceeds Rs 2.5 lakh,”
The rating agency expects gold loan growth for NBFCs to moderate to 17–19% in FY27, compared with an estimated 60–65% in FY26, citing operational adjustments and tighter renewal norms.