RBI’s New Rules for Gold Loans Allow People to Avail Loan on Up to 85% of Gold Value
The Reserve Bank of India (RBI) has released new rules for gold loans worth up to ₹5 lakh, providing a significant boost to individuals looking to avail loans against their gold and silver jewelry. As per the new regulations, borrowers can now get loans equal to 85% of the pledged gold or silver’s value, making it easier for people to access credit.
The RBI’s move is aimed at promoting financial inclusion and providing more opportunities for people to access formal credit channels. The new rules are expected to benefit individuals, especially those living in rural areas, who often rely on informal sources of credit at exorbitant interest rates.
What do the new rules mean for borrowers?
Under the new rules, borrowers can now get loans equal to 85% of the value of their pledged gold or silver jewelry. This means that if you have gold or silver jewelry valued at ₹50,000, you can now get a loan of up to ₹42,500 (85% of ₹50,000). The remaining 15% of the value will be kept as collateral.
The new rules also exempt the value of precious stones and gems part of gold or silver jewelry from being added to the collateral’s valuation. This is a significant change, as previously, the value of precious stones and gems was added to the overall valuation of the gold or silver jewelry, reducing the amount of loan that could be availed.
What are the benefits of the new rules?
The new rules offer several benefits to borrowers, including:
- Increased loan amount: With the new rules, borrowers can now get loans equal to 85% of the value of their pledged gold or silver jewelry, providing more financial support.
- Simplified process: The new rules simplify the process of availing a gold loan, making it easier for people to access credit.
- Increased financial inclusion: The new rules are expected to promote financial inclusion by providing more opportunities for people to access formal credit channels.
- Reduced reliance on informal sources: The new rules are likely to reduce the reliance on informal sources of credit, which often charge exorbitant interest rates.
What are the restrictions on gold loans?
While the new rules provide more opportunities for people to access gold loans, there are some restrictions that lenders must adhere to. These include:
- Ownership doubts: Lenders are allowed to deny loaning money using gold or silver as collateral if their ownership is doubtful.
- Value of precious stones and gems: As mentioned earlier, the value of precious stones and gems part of gold or silver jewelry will not be added to the collateral’s valuation.
- Loan amount: The loan amount is capped at ₹5 lakh.
Conclusion
The RBI’s new rules for gold loans are a significant step towards promoting financial inclusion and providing more opportunities for people to access formal credit channels. With the ability to get loans equal to 85% of the value of pledged gold or silver jewelry, borrowers can now access more credit and reduce their reliance on informal sources of credit. While there are some restrictions on gold loans, the new rules are expected to benefit individuals and promote financial inclusion.
