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 â‚ą2,50,000, 80% for loans up to â‚ą5,00,000, 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%): â‚ą2,12,500 eligible. Old flat 75% rule: â‚ą1,87,500. â‚ą25,000 more available, purely from the reform.
New tiered rule (80%): â‚ą4,00,000 eligible. Old flat 75% rule: â‚ą3,75,000. Again â‚ą25,000 more.
New tiered rule (75%, the top tier still applies here): â‚ą7,50,000 eligible. Old flat 75% rule: the identical â‚ą7,50,000. 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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