How much can a bank lend against gold?
The maximum loan to value ratio on a consumption loan against gold.
Short answer. Up to 85 per cent of the pledged metal value for a loan up to 2.5 lakh rupees, 80 per cent between 2.5 and 5 lakh rupees, and 75 per cent above 5 lakh rupees. The ratio must hold for the whole life of the loan.
The rule, lender by lender
| Total consumption loan per borrower | What the rule says |
|---|---|
| Up to 2.5 lakh rupees | A consumption loan up to ₹2.5 lakh may not exceed 85 per cent of the pledged metal value. Read the rule |
| Above 2.5 lakh and up to 5 lakh rupees | A consumption loan between ₹2.5 lakh and ₹5 lakh may not exceed 80 per cent of the pledged value. Read the rule |
| Above 5 lakh rupees | A consumption loan above ₹5 lakh may not exceed 75 per cent of the pledged metal value. Read the rule |
| Finance company, up to 2.5 lakh rupees | A consumption loan up to ₹2.5 lakh may not exceed 85 per cent of the pledged metal value. Read the rule |
What else the rule says
- The loan to value ratio must hold for the whole life of the loan. · source
- On a bullet repayment loan the ratio is worked out on the total amount repayable at maturity. · source
- A renewal or top-up is allowed only within the permitted ratio and while the loan is standard. · source
- Gold or silver must be valued at the reference price for its real purity. · source
- Coins pledged by one borrower cannot cross 50 grams of gold or 500 grams of silver. · source
- The bank must check that a borrower is not buying or holding gold to invest or speculate. · source
- A bank cannot raise its own loan by re-pledging gold or silver that borrowers pledged to it. · source
Where this comes from
- Reserve Bank of India (Urban Co-operative Banks – Credit Facilities) Directions, 2025 (Updated as on July 15, 2026)
- Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025 (updated as on July 15, 2026)
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Plain-language summary, not the official text. Not legal advice. Every line above is a point published on the rule page it links to. · Report a mistake