What Are The New Rules to Take A Gold Loan in India?

In India, the Reserve Bank of India (RBI) has issued guidelines for gold loans, which specify the rules for taking a gold loan. Some of the new rules for taking a gold loan in India are as follows:

Loan-to-Value (LTV) ratio: The RBI has increased the loan-to-value ratio for gold loans from 75% to 90%. This means that borrowers can now avail of a loan amount up to 90% of the value of the gold pledged as collateral.

Minimum loan amount: The RBI has set a minimum loan amount of Rs. 10,000 for gold loans issued by banks and Rs. 1,000 for loans issued by NBFCs.

KYC norms: To avail of a gold loan, borrowers are required to provide Know Your Customer (KYC) documents, which include proof of identity, address, and income.

Interest rate and fees: Lenders are required to disclose the interest rate and all applicable fees and charges upfront to borrowers. The RBI has also directed lenders to adopt fair practices in the recovery of loans and not to levy any penalty charges on delayed payments.

Renewal and repayment: Lenders are not allowed to renew gold loans more than six times, and borrowers are required to repay the loan amount along with interest and fees within the specified tenure. The RBI has also directed lenders to provide an option to borrowers for prepayment of the loan without any penalty charges.

It is important to note that the specific rules for taking a gold loan in India may vary depending on the lender and the terms of the loan. Borrowers are advised to carefully read the terms and conditions of the loan agreement before availing of the loan.