RBI Draft Norms on Co-Lending and Gold Loans: Key Proposals
Why in the news
The RBI put out proposals to bring co-lending and gold-jewellery lending under harmonised rules, aiming for more transparency, lower risk and wider credit access.
Co-lending proposals
- Scope widened to all regulated entities, so NBFC-NBFC and bank-bank pairs are possible.
- Default-loss guarantee up to 5% of outstanding loans permitted.
- Borrower safeguards: mandatory escrow account, 30-day grievance timeline, disclosure of APR, blended rate and other charges.
Gold loan proposals
| Area | Proposal |
|---|---|
| End use | Classify as income-generating (farm, business) or consumption; same gold cannot back both |
| Consumption loan tenor | Bullet repayment loans by banks capped at 12 months |
| Cooperative and regional rural banks | Consumption loan cap of ₹5 lakh |
| LTV ratio | 75% for all NBFC gold loans and bank consumption loans |
| Barred collateral | Bullion, bars, ETFs, gold mutual funds; re-pledged or unclear-ownership gold |
| Top-ups and new loans | Top-up only after interest paid; new loans need fresh request and assessment |
- Tenor and amount must reflect the borrower’s income capacity, not just the gold value.
- Lenders set and periodically review portfolio exposure limits.
Industry impact
- Gold financiers face stricter compliance but gain clearer risk frameworks.
- Borrowers get regulated rates, quicker access and stronger protection.
Exam angle
- Guarantee cap 5%; grievance limit 30 days; LTV 75%.
- Terms: co-lending, escrow, bullet repayment, PSL.