It will be difficult to take gold loan!
Gold Loan: If you are also planning to take a loan against the gold jewelery kept at home to meet your immediate needs, then this news may disappoint you a bit. Till now, gold loan was considered the easiest source of cash, but after the warning of the Reserve Bank of India (RBI), financial institutions have tightened the rules for giving loans, which is going to have a direct impact on the loan amount.
Why did the banks change their stance?
The main reason for this sudden change in the gold loan market gold There is huge fluctuation in the prices. RBI has clearly warned the lenders that the ongoing instability in the bullion market can become a threat to the health of the banks. Following this advice, the banks which earlier used to easily give loan (LTV) up to 70 to 72 percent of the value of your gold, have now withdrawn their hands. Now this limit has been reduced to 60 to 65 percent.
If you understand in simple words, if you had earlier mortgaged gold worth Rs 1 lakh, you would have got up to Rs 72 thousand, but now you will probably get only Rs 60 to 65 thousand on the same gold. Banks have taken this step to strengthen their risk management.
What will happen if gold prices fall?
Banks are worried not just about today’s prices, but about future fears. Gold prices are currently skyrocketing—the price on MCX is close to Rs 1.31 lakh per 10 grams. But the question is, what will happen if the price of gold falls by 10 to 15 percent tomorrow?
Banks fear that if the value of gold falls, the outstanding loan amount may be more than the value of the gold pledged. In such a situation, the borrower may find it better to default rather than repay the loan, as his pledged gold would have become cheaper than the loan amount. This situation can put a huge pressure on the asset quality of banks and sensing this danger, lenders have now adopted a policy of ‘moving cautiously’.
21 to 30 year old youth are taking loans heavily
Another major cause of concern for RBI and banks is the changing profile of borrowers. If we look at the data, we find that the rate of taking gold loans by youth aged between 21 to 30 years has doubled since the financial year 2021. At the same time, people aged 31-40 years are taking about 45 percent of the total gold loan.
The problem is that instead of creating any asset or investing it in business, this money is being used for ‘consumption’ i.e. to meet daily needs and expenses. Since March 2025, gold loans have seen a year-on-year increase of 100 percent. In October 2025, this figure had reached a record level of Rs 3.37 lakh crore. After such rapid growth, the industry has now considered it right to choose stability over aggressive expansion, so that old crises like microfinance or personal loans are not repeated.
Also read- Pressure on gold and silver, will gold and silver become cheaper next week?