The Reserve Bank of India updated the gold loan framework through a comprehensive circular issued in June 2025. The new rules came into full effect on April 1, 2026 and apply to every registered bank and NBFC offering gold loans across India, including Kandhavillas Finance.

If you have an active gold loan or are planning to take one, these changes affect you directly. Here is a plain, honest explanation of what has changed and what it means for you.

For gold loans under ₹2.5 lakh, the new loan-to-value (LTV) limit is 85%, up from the earlier 75% that applied to all loans. This means more money for the same amount of gold pledged.

If your gold is assessed at ₹1.5 lakh, you can now borrow up to ₹1.27 lakh instead of the earlier ₹1.12 lakh.

This tiered approach is designed to benefit smaller borrowers, especially households and individuals who rely on gold loans for emergencies, education, or working capital.

Earlier, many borrowers extended or renewed their loan without settling accumulated interest. Under the new framework, all outstanding interest must be cleared before a renewal or top-up is processed.

If you have a bullet repayment loan and plan to extend it, factor this into your planning well in advance.

Note: Under the new framework, bullet repayment gold loans are capped at a maximum tenure of 12 months. If you have a bullet loan approaching this limit, please contact us to discuss your options.

Once you repay the loan in full, the lender is legally required to return your pledged gold within 7 working days. This is a significant borrower protection.

If the lender fails to return your gold within this window, they are required to pay ₹5,000 per day of delay as compensation.

Every lender must give you a written certificate showing the purity in carats, gross weight, and net weight of the gold you have pledged. This certificate must also note any deductions for stones, lac, strings, or damage.

Keep this document safely. It is your proof of exactly what you handed over and your protection at the time of repayment.

Does this affect my existing gold loan?
Yes. The rules apply to all gold loans from April 1, 2026 onwards, including renewals and top-ups on existing loans. If you are planning to renew a loan, clear any outstanding interest first.

I took a loan before April 2026. Does my LTV change?
The higher LTV limits apply to new loans and renewals processed from April 1, 2026. If you took a loan at 75% LTV before that date, the original terms remain for the current tenure. The new limit applies when you renew or take a fresh loan.

What if I do not receive my gold within 7 working days of repayment?
Contact your lender in writing immediately. Under RBI rules, they owe you ₹5,000 per day of delay from the 8th working day onward. If the lender does not respond, you may escalate to the RBI's banking ombudsman.

I do not have the original purchase receipt for my jewellery. Can I still get a loan?
Yes. A signed declaration confirming ownership is acceptable under the new RBI framework when original receipts are not available. Your lender will document this at the time of application.

Kandhavillas Finance has updated our processes fully in line with the new RBI framework. If you have questions about how these changes affect your loan or a new application, call us at 936 336 0004 or visit kandhavillas.com.