Gold Loan in India 2026: RBI Rules, Interest Rates & Eligibility

A gold loan is money you borrow against jewellery you already own. Most banks and NBFCs disburse it within a few hours and don’t ask for income proof. The Reserve Bank of India issued a new set of rules for gold loans in June 2025, and every lender has had to follow them since April 2026 — including how much you can borrow against your gold and what lenders have to tell you upfront. The details are below.

🕑 Last updated on 16th August 2026

RBI’s 2026 Gold Loan Rules: What Changed

Until 2025, banks, NBFCs, and co-operative banks each followed their own LTV caps and disclosure norms for gold loans. The Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025 put all of them under one set of rules instead. RBI notified the Directions on 6 June 2025 (RBI/2025-26/47), with a compliance deadline of 1 April 2026 for lenders. The old flat 75% loan-to-value cap is gone, replaced by the tiered structure below, and lenders now have to disclose their gold valuation method the same way nationwide.

LTV (loan-to-value) is the maximum percentage of your gold’s assessed value that a lender can advance as a loan — so on a ₹1 lakh valuation, you could borrow up to ₹85,000 under the smallest tier. A few other things the Directions require:

• A Key Fact Statement (KFS) before disbursal, spelling out the interest rate, all fees, and any prepayment charges in one standardised document.
• Lenders must publish their gold/silver valuation methodology on their website — no more opaque, branch-specific pricing.
• No loans against re-pledged gold, and renewals are allowed only if your existing loan is a standard (non-defaulted) asset.
• Lenders generally cannot finance the purchase of gold itself or lend against gold-backed instruments like Gold ETFs.

💡 BIS hallmarking is not required to get a gold loan, despite what many borrowers assume. Lenders test purity in-branch using their own certified methods regardless of hallmark status, though non-hallmarked jewellery may get a more conservative valuation at some lenders.

Gold Loan Interest Rates: Banks vs NBFCs (2026)

Rates vary widely by lender type, loan amount, and tenure. Public sector banks are consistently cheapest; NBFCs charge more but process faster and lend with far less paperwork. Approximate current ranges, cross-checked across rate-tracking sources:

Rates as of August 2026, compiled from ClearTax and BankBazaar‘s rate trackers. Lenders revise rates frequently — always confirm the live rate and your Key Fact Statement before signing.

Eligibility & Documents

Repayment: EMI vs Bullet Repayment

On prepayment: for floating-rate gold loans, RBI’s fair practices rules don’t permit lenders to charge a foreclosure or prepayment penalty. Fixed-rate schemes may carry a fee, but only if it’s explicitly disclosed in your Key Fact Statement and sanction letter — read that document before signing rather than assuming either way.

If gold prices fall and your outstanding loan drifts above the permitted LTV, lenders can ask you to pledge additional gold or repay part of the principal to bring the ratio back in line. RBI also requires lenders to give you notice before auctioning pledged gold on default, and to return any surplus from the auction after recovering what you owe.

Tax Treatment of Gold Loan Interest

There’s no blanket tax deduction on gold loan interest the way there is for a home loan. If you use the loan for personal expenses, the interest isn’t deductible at all. If the funds are demonstrably used for business or income-generating purposes, the interest may qualify as a deductible business expense under Section 36(1)(iii) or Section 37(1) of the Income Tax Act — provided you maintain proper documentation showing how the money was used. (This is unrelated to Section 80E, which covers education loan interest, not gold loans.)

FAQ