Gold loan industry urges RBI to delay new gold and silver lending guidelines: 3 key reasons why

The Association of Gold Loan Companies (AGLOC) has formally requested a six-month extension for the implementation of the Reserve Bank of India’s (RBI) new gold and silver lending guidelines, originally set to take effect on April 1, 2026.

Why the industry is seeking a delay: Key reasons

As per a report in PTI, in submissions to the RBI and the Finance Ministry, AGLOC highlighted several external pressures making the April 1 deadline challenging:

1. The ongoing conflict in the Middle East is threatening energy supply chains and fueling inflation.

2. Small businesses and households are facing temporary income volatility.

3. AGLOC warns that strict, immediate enforcement could disproportionately hurt lower-and middle-income borrowers who rely on gold loans for "counter-cyclical" liquidity during crises.

"A calibrated and phased approach would ensure a smoother transition while maintaining uninterrupted access to credit for these segments," said AGLOC.

The gold loan industry remains a critical pillar in providing timely liquidity, especially during periods of global uncertainty.

"While the proposed regulatory norms aim to strengthen the sector, a calibrated approach with a temporary deferment can help ensure smoother adaptation without disrupting credit access for millions. Geopolitical volatility has heightened the need for accessible and reliable financing options, where gold loans continue to play a vital role," said Senthil Kumar R, MD and CEO, Nitstone Finserv.

"A balanced framework that supports both regulatory objectives and industry stability will further enhance confidence, enabling the sector to sustain growth while continuing to meet the evolving financial needs of customers effectively," added Senthil Kumar R.

What’s changing on April 1?

The traditional flat 75% Loan-to-Value (LTV) cap is being replaced by a risk-based tiered model:

• Small Loans (Up to ₹2.5 lakh): Up to 85% LTV.

• Medium Loans (₹2.5 lakh – ₹5 lakh): Up to 80% LTV.

• Large Loans (Above ₹5 lakh): Strictly capped at 75% LTV.

Borrowers will no longer be able to "roll over" loans indefinitely by just paying interest. All bullet repayment loans must be settled within 12 months, requiring full principal repayment before a new loan can be sanctioned.

Lenders must return pledged assets within 7 working days of repayment. A failure to do so will trigger a mandatory penalty of ₹5,000 per day payable to the borrower.