Gold Loan: The Reserve Bank of India has made a major change to the rules governing gold loans. Now, banks and non-banking financial companies will only be able to provide gold loans to the actual owner of the gold.
This means that lending based on gold pledged or re-pledged by another person will be completely prohibited. The RBI states that this move is aimed at increasing transparency and reducing risk in the gold loan business. No bank or NBFC will now offer loans where the pledged gold is already pledged with another borrower or institution. The new system will take effect on April 1, 2026, giving banks and NBFCs time to review and adjust their existing gold loan portfolios.
This decision will directly impact moneylenders, moneylenders, and intermediaries who use customers’ gold as collateral to obtain new loans from banks or financial institutions. Experts believe this rule will improve discipline and oversight in the gold loan sector and reduce banks’ credit risk. The RBI has also directed banks to thoroughly verify the ownership of gold when issuing loans and to strengthen regular audits.
Keep the interest rate at a reasonable level
Financial Services Secretary M Nagaraju on Thursday urged small-money lending financial institutions (MFIs) to keep their interest rates reasonable to promote financial inclusion. He said people in dire need of money may borrow at higher interest rates but are unable to repay them, leading to a rise in stressed assets at financial institutions. The stress in the sector has led to a decline in the number of accounts due to the pandemic to 3.4 lakh at the end of March 2025 from 4.4 lakh on March 31, 2024.
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