RBI's tiered gold loan LTV rules, explained
What changed in April 2026, and why smaller loans now get a bigger ceiling.
Until this year, every gold loan in India was capped at the same 75% of the gold’s value, regardless of size. That flat rule is gone — but the replacement isn’t as simple as “smaller gold, bigger percentage.”
What changed: a flat cap became three tiers
Effective 1 April 2026, the RBI replaced the flat 75% Loan-to-Value ceiling with three tiers: up to 85% for loans up to ₹2,50,000, 80% for loans up to ₹5,00,000, and the traditional 75% retained for anything larger. Smaller borrowers get meaningfully more credit against the same gold; larger loans see no change at all.
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How the tier actually resolves: by loan amount, not gold value
Each tier’s ₹2,50,000 / ₹5,00,000 boundary is stated in terms of the resulting loan amount, not the gold’s own value — so the correct way to resolve which tier applies is to check, tier by tier from most generous to least, whether that tier’s own percentage would produce a loan that still fits inside its own ceiling.
Naively, this might look like it misses the top tier. But 85% of ₹2,60,000 is ₹2,21,000 — comfortably under the ₹2,50,000 loan-size ceiling — so it doesqualify for the 85% tier. The gold’s value being above ₹2.5 lakh doesn’t disqualify it; only the resulting loan amount matters.
What the reform actually saves, tier by tier
Comparing the new tiered ceiling against the old flat 75% rule, at the same gold value, shows exactly where the reform helps and where it changes nothing.
New tiered rule (85%): ₹2,12,500 eligible. Old flat 75% rule: ₹1,87,500. ₹25,000 more available, purely from the reform.
New tiered rule (80%): ₹4,00,000 eligible. Old flat 75% rule: ₹3,75,000. Again ₹25,000 more.
New tiered rule (75%, the top tier still applies here): ₹7,50,000 eligible. Old flat 75% rule: the identical ₹7,50,000. No change at all — large gold loans see exactly the same ceiling they always did.
All figures are indicative and for educational purposes only — not financial advice.
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