Gold Loan Rules in 2026: What Borrowers Must Know Before Pledging Jewellery
Gold loans continue to remain one of the quickest ways to access funds in India. However, before pledging jewellery in 2026, borrowers must understand the latest Reserve Bank of India (RBI) guidelines on eligibility, valuation, loan limits and settlement rules.
Eligible Gold for Loans
Loans can be availed by pledging:
- Gold jewellery and ornaments
- Gold coins up to 50 grams per borrower
Banks and NBFCs are not allowed to lend against gold bars, bullion, biscuits or gold-backed financial products such as ETFs. RBI regulations restrict lending only to gold ornaments and specified coins.
An individual can pledge up to 1 kilogram (around 125 sovereigns) of gold ornaments.
Loan Amount and LTV Limits
The amount you can borrow depends on the gold price and the Loan-to-Value (LTV) ratio permitted by RBI.
For 2026, the LTV structure is:
- Up to 85% for loans up to ₹2.5 lakh
- Up to 80% for loans between ₹2.5 lakh and ₹5 lakh
- Up to 75% for loans above ₹5 lakh
While RBI permits high-value lending, many banks and NBFCs impose their own internal caps. Some lenders, for example, may restrict total gold loan exposure to ₹50 lakh per customer.
How Gold is Valued
Lenders calculate the loan amount based on:
- Purity (carat value) of the gold
- Prevailing market price
As per RBI norms, valuation must be based on the lower of:
- The average closing price of that purity over the previous 30 days, or
- The previous day’s closing price
Prices must be sourced from approved bullion associations or SEBI-regulated commodity exchanges.
Importantly, only the gold content is valued. Stones, diamonds and other embellishments attached to jewellery are excluded from the calculation.
Safety and Compensation Rules
Once gold is pledged, the responsibility for safekeeping lies entirely with the lender.
- If the jewellery is damaged, the lender must bear repair costs.
- In case of loss, weight discrepancy or purity-related issues, the borrower is entitled to compensation.
Delay in Returning Gold
After full repayment, lenders are required to return pledged gold without delay.
- If there is a delay attributable to the lender, borrowers are entitled to ₹5,000 per day as compensation.
- If the delay is due to other reasons, it must be formally communicated.
Lenders must also notify customers if pledged gold remains uncollected after settlement.
The Bottom Line
Gold loans can be a convenient borrowing option, but understanding eligibility norms, valuation methods, LTV limits and settlement safeguards is s crucial. Borrowers are advised to compare lender policies and verify updated RBI guidelines before proceeding.
Disclaimer
This article is for informational purposes only and is based on regulatory norms applicable in 2026. Loan approval, valuation, interest rates and compensation terms may vary depending on RBI regulations and individual lender policies. Borrowers should confirm current terms directly with their financial institution.
