RBI Announces New Guidelines to Boost Gold Loan Market

Date:

LTV Ratio on Gold Loans Increased to 85%

In a significant move aimed at boosting liquidity and providing relief to borrowers, the Reserve Bank of India (RBI) has rolled out new guidelines to enhance the Loan-to-Value (LTV) ratio on gold loans up to ₹2.5 lakh. As per the revised guidelines, the LTV ratio has been increased to 85% from the previous cap of 75%.

The decision is expected to benefit millions of borrowers who use gold loans to meet their financial needs, particularly in rural areas where gold is a widely accepted form of collateral. With the increased LTV ratio, borrowers will now be able to avail more loan amount against their gold assets, thereby enhancing their liquidity.

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*What Does This Mean for Borrowers?*

The increased LTV ratio of 85% implies that borrowers will now be able to borrow up to 85% of the value of their gold assets, up from the previous 75%. For instance, if a borrower’s gold asset is valued at ₹2 lakh, they will now be eligible for a loan of up to ₹1.7 lakh (85% of ₹2 lakh), compared to ₹1.5 lakh (75% of ₹2 lakh) earlier.

*Impact on the Gold Loan Market*

The RBI’s decision is likely to have a positive impact on the gold loan market, which has been witnessing significant growth in recent years. The increased LTV ratio will not only make gold loans more attractive to borrowers but also enable them to meet their financial needs more effectively.

*Key Benefits*

1. *Increased Liquidity*: The higher LTV ratio will provide borrowers with more liquidity, enabling them to meet their financial needs more effectively.

2. *More Attractive*: Gold loans will become more attractive to borrowers, particularly in rural areas where gold is a widely accepted form of collateral.

3. *Boost to Economic Growth*: The move is likely to provide a boost to economic growth by increasing the flow of credit to individuals and small businesses.

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*What Do Industry Experts Say?*

Industry experts have welcomed the RBI’s decision, saying it will provide a much-needed boost to the gold loan market. “The increased LTV ratio will enable borrowers to avail more loan amount against their gold assets, thereby enhancing their liquidity. This move is likely to benefit millions of borrowers and provide a boost to economic growth,” said a leading banker.

*Conclusion*

The RBI’s decision to increase the LTV ratio on gold loans up to ₹2.5 lakh is a significant move that is likely to have a positive impact on the gold loan market. With the increased LTV ratio, borrowers will now be able to avail more loan amount against their gold assets, thereby enhancing their liquidity. The move is expected to benefit millions of borrowers and provide a boost to economic growth.

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