RBI Draft Gold Loan Norms: 75% LTV Cap for All Lenders

Why in the news

RBI proposed a common rulebook for gold lending, and gold loan NBFC shares slipped.

Key facts

• 75% LTV ceiling covers consumption loans and every NBFC loan.
• Policies must carry single borrower limits, sectoral caps, end-use checks, valuation and purity standards.
• Lenders must cap gold loans as a share of total loans and review it regularly.
• Borrower ceilings must separate income-generating and consumption loans.

Barred collateral

• Primary gold or silver.
• ETFs or mutual fund units backed by gold or silver.
• Gold with doubtful ownership.
• Repledged gold.

Significance

• Near-term pain for NBFCs, but better discipline and risk governance later.

Exam angle

• LTV: 75%; biggest fall: Muthoot (7%).