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Indian Bank, Punjab National Bank, and Canara Bank are offering gold loans at interest rates between 8 percent and 8.80 percent per annum.
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Lenders have until April 1, 2026, to comply with the new norms
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RBI’s higher LTV ceiling sparks opportunity for NBFCs, but gold price volatility demands tight risk controls
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RBI’s New Gold Loan Rules: The objective is to mitigate volatility risk inherent to such products. However, excluding gold bars, gold and silver ETFs and mutual fund units as collateral may limit options for investors, say experts.
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Gold loan NBFCs rallied on June 9 after the RBI released final guidelines raising the loan-to-value ratio to 85 percent for loans up to Rs 2.5 lakh.
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CSB Bank has articulated its long-term vision, under which, by FY2030, its loan portfolio will be well-diversified with 20% in gold, 30% in retail, 20% in SME and 30% in wholesale and other businesses.
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While gold prices may be shining bright, gold loans are seeing pockets of stress that has led to the RBI issuing proposals to curb excesses
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According to the RBI's Sectoral Deployment of Bank Credit released on March 27 showed that credit extended to borrowers for loans against gold jewellery rose sharply in February 2025, coinciding with a record rise in gold prices, with gold loan portfolio at the end of the month rising by 87.4 percent as compared to a growth of 15.2 percent a year ago.
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CSB Bank benefits immensely from a gold loan portfolio that has higher yields, low credit costs and lower risk weights, offsetting pressures facing small banks
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The year 2024 belonged to gold loans clearly. From one of the largest players, IIFL Finance, being banned for a little over six months this year to the regulator waking up the irregularities in the sector, gold loans have become the product everyone wants to focus on. But if unsecured loans are being realigned as secured gold loans product, is that proposition well thought through?
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Gold prices have escalated in recent years and are up by 25.96 percent year-over-year. This makes the yellow metal a more valuable commodity for banks to give loans against.
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Gold loans: Indian Bank, State Bank of India offer the cheapest gold loans at interest rates of 8.8-9.05 percent per annum. A gold loan is secured and is given when customers pledge their gold with the bank.
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Profitability dragged down by a sharp fall in margin and higher operating expenses
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Manappuram Finance stock has grown significantly over the past few months, gaining over 66 percent in the last on year compared to 27 percent rise seen in benchmark Nifty 50.
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The bank hugely benefits from a gold loan portfolio that has higher yields, low credit costs, and lower risk weights.
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RBI, in an advisory, has asked NBFCs to stick to cash disbursal limit of Rs 20,000. This will cause a one-time impact on NBFCs that have a higher proportion of cash disbursals, said Ambit.
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The bank hugely benefits from a gold loan portfolio that has higher yields, low credit costs, and lower risk weights
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In early March, RBI ordered IIFL Finance to stop sanctioning, disbursing and selling gold loans
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Being a secure product, the interest rate on a gold loan can be lower than that for a personal loan, making it a more attractive proposition for a borrower.
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The measure is part of RBI’s supervisory action over concerns around certain loan disbursement practices. IIFL Finance said it is extending full cooperation to the special audit team.
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Recently, ICICI Securities upgraded Muthoot Finance to 'buy' with a target price of Rs 1,605 a share. It maintained 'buy' on Manappuram Finance but raised the target price to Rs 220
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Margin gain unlikely in principal gold loan business and non-gold businesses will entail higher credit cost
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Speaking after announcing the bi-monthly policy review, Das also announced that the RBI will be issuing a comprehensive regulatory framework on project finance.
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Jain said Indian Bank was open to lending to airline companies.
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During the quarter, MCX gold prices surged 5-8 percent and traded above the Rs 60,000 per 10 grams mark, according to Bloomberg data.
