April 11, 2025 - The Reserve Bank of India (RBI) is set to introduce new guidelines to make gold loan regulations more transparent. A draft of the new rules has already been released. The draft includes several customer-friendly provisions to prevent fraud and exploitation by lenders. Its objectives are to improve collateral management, streamline the underwriting procedures and guarantee that the money is used properly.

According to the proposed guidelines, a customer will now be able to take a loan against a maximum of one kilogram of jewellery, whether gold or silver. If the loan is being taken against gold coins, they must be at least 22 carats and purchased from a bank. Loans will not be allowed against gold coins bought from other sources.

Moreover, a customer will be allowed to pledge a maximum of 50 grams of gold coins for a loan. In the case of silver, the limit has been set at 500 grams per customer.

Once the loan is fully repaid, banks and financial institutions will be required to return the pledged gold within a maximum of 7 days. Failure to do so will result in the financial institution paying a penalty of Rs 5,000 per day to the customer.

Financial institutions will be required to provide written loan details in the borrower’s preferred language. If the borrower is illiterate, it will be mandatory for the lender to clearly explain all loan terms in their native language.

These proposed measures aim to ensure fairness, transparency, and protection for customers in the gold loan market.

With Media Inputs