📜 Read the original circular — full text as issued by RBI
Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 1065 kb ) Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025 (Updated as on July 15, 2026) RBI/DOR/2025-26/154 DOR.CRE.REC.73/07-01-001/2025-26 November 28, 2025 Previous Versions Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025 (Updated as on July 15, 2026) Table of Contents Chapter I - Preliminary A. Short Title and Commencement B. Applicability C. Definitions Chapter II - Role of The Board Chapter IIA: Credit Facilities Linked to Specific Payment Instruments Chapter III - Digital Lending Guidelines A. General Requirements for bank-LSP Arrangements B. Conduct and Customer Protection Requirements C. Technology and Data Requirement D. Reporting of Credit Information and DLAs E. Loss sharing arrangement in case of default F. General Provisions Chapter IV - Lending against Gold and Silver Collateral A. General Provisions B. Restrictions and Ceilings C. Valuation and Assaying of Gold and Silver collateral D. Loan to Value Ratio (LTV) E. Other Provisions Chapter V - [Deleted] Chapter VA - Gold Metal Loans (GML) A. Introduction B. Eligible Banks C. General Instructions D. Repayment of GML E. Disclosures Chapter VI - Microfinance A. Definition of Microfinance B. Assessment of Household Income C. Limit on Loan Repayment Obligations of a Household D. Other provisions Chapter VII - Project Finance A. Phases of Projects B. Prudential Conditions Related to Sanction C. Prudential Conditions Related to Disbursement and Monitoring D. Other Provisions Chapter VIII - Credit Facilities to Real Estate Sector A. Loans and advances to Real Estate Sector B. Housing Finance C. Loans and advances to Commercial Real Estate (CRE) D. Simultaneous classification of CRE into other regulatory categories E. Loans and Advances to Commercial Real Estate - Residential Housing Chapter IX - Infrastructure Financing A. Criteria for Financing B. Types of Financing by Banks C. Appraisal D. Prudential requirements Chapter X - Discounting / Rediscounting of Bills Chapter XI - Acquisition Finance A. ***** B. ***** C. ***** D. Board approved policy E. Eligible Entities and Conditions Chapter XII - Credit Facilities to Overseas Joint Ventures (JV) / Wholly Owned Subsidiaries Abroad and overseas Step-down Subsidiaries of Indian Companies Chapter XIII - Loans Against Financial Assets A. ***** B. ***** C. ***** D. ***** E. ***** F. ***** G. ***** H. ***** I. ***** J. ***** K. ***** L. ***** M. Advances against Fixed Deposit Receipts (FDRs) N. ***** O. Grant of Loans for acquisition of / investing in Small Saving Instruments P. ***** Q. Loans against Eligible Securities Chapter XIII A – Credit Facilities to Capital Market Intermediaries (CMIs) A. Scope B. General Conditions C. Permissible and Prohibited Credit Facilities D. Security Coverage Chapter XIV - Finance to Non-Banking Financial Companies (NBFCs) A. Finance to NBFCs registered with RBI B. Finance to NBFCs not requiring Registration C. Activities not eligible for Bank Credit D. Finance to Factoring Companies E. Other Prohibitions on Finance to NBFCs F. Other Instructions Chapter XV - Export Credit A. Rupee Pre-shipment Credit / Packing Credit B. Rupee Pre-shipment Credit to specific sectors / segments C. Rupee Post-Shipment Export Credit D. Deemed Exports - Rupee Export Credit E. Interest on Rupee Export Credit F. Pre-shipment Credit in Foreign Currency (PCFC) G. Post-shipment Credit in Foreign Currency: Rediscounting of Export Bills Abroad Scheme (EBR) H. Gold Card Scheme for exporters I. 'On line' credit to exporters J. Other Provisions K. Special Measures Chapter XVI - Non-Fund Based (NFB) Credit Facilities A. General Conditions B. Guarantees C. Usage of electronic-Guarantee D. Guarantee favouring another RE E. Co-acceptances F. Guarantee and related business involving overseas current or capital account transaction G. Guarantees on behalf of Stock / Commodity Brokers H. Partial Credit Enhancement – Salient Features I. Additional conditions for providing PCE to bonds of NBFCs and HFCs J. Other Aspects of PCE Chapter XVII - Miscellaneous Provisions A. Bank finance to Government owned entities B. Loans and advances to Micro, Small & Medium Enterprises (MSMEs) C. Bridge Loans against Receivable from Government Chapter XVIII - Repeal and other provisions A. Repeal and saving B. Application of other laws not barred C. Interpretations Annex - I Annex - II Annex - III Annex - IV Annex - V Introduction Reserve Bank of India (Reserve Bank) is statutorily mandated to operate the credit system of the country to its advantage. In pursuit of this mandate, the Reserve Bank encourages innovation in the financial systems, credit products and delivery mechanisms while ensuring orderly growth, financial stability and the protection of depositors’ and borrowers’ interest. With the progressive deregulation of bank credit, prudential norms primarily serve as regulatory safeguards. These norms, issued from time to time, provide guidance to regulated entities (REs) on the design and delivery of credit-related products and services. These Directions consolidate the instructions issued to commercial banks on credit facilities. Accordingly, in exercise of powers conferred by Sections 21, and 35A of the Banking Regulation Act, 1949, the Reserve Bank being satisfied that it is necessary and expedient in the public interest so to do, hereby issues these Directions hereinafter specified. Chapter I - Preliminary A. Short Title and Commencement 1. These Directions shall be called the Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025. 2. These Directions shall come into effect immediately upon its issuance, unless indicated otherwise. B. Applicability 3. These Directions shall be applicable to Commercial Banks (hereinafter collectively referred to as 'banks' and individually as a 'bank'). For the purpose of these Directions, ‘Commercial Banks’ means banking companies (other than Small Finance Banks, Payment Banks, and Local Area Banks), corresponding new banks, and the State Bank of India, as defined respectively under clauses (c), (da), and (nc) of Section 5 of the Banking Regulation Act, 1949. C. Definitions 4. (1) For the purpose of these Directions, following definitions shall apply: 1 [(ia) ‘Acquisition Finance’ shall mean a financial facility or assistance provided to an eligible borrower entity for the purpose of acquiring control in a target company (including through a scheme of amalgamation or merger). Such funding may also involve refinancing of existing debt of the target company if the refinancing is integral to the acquisition finance.] 2 [(ib)] ‘Actual Date of Commencement of Commercial Operations (actual DCCO)’ means the date on which the project is put to commercial use and completion certificate / provisional completion certificate / occupancy certificate (in case of CRE and CRE-RH projects) or its equivalent is issued to the concessionaire / project developer / promoter. (ii) ‘Annual Percentage Rate’ (APR) means APR as defined under Reserve Bank of India (Commercial Banks - Responsible Business Conduct) Directions, 2025 . (iii) ‘Appointed Date’ means the date, as defined in the concession agreement entered into between the concessionaire and the concession granting authority, on which the concession agreement comes into force in accordance with the terms outlined therein (applicable only in the case of infrastructure projects under Public Private Partnership (PPP) model). (iv) ‘Beneficiary’ means the party in whose favour the NFB facility is issued by the bank. 3 [(iva) ‘Bridge Finance’ shall mean financing a borrower for an interim period, not exceeding one year, for a legitimate business purpose where the borrower has a firm plan and capability to repay such loans by raising financial resources either through issuance of equity, debt or hybrid instruments or by divestiture/hive-off of a part of existing business/assets within the interim period.] (v) ‘Bullet Repayment Loans’ means loans where both principal and interest are due for payment at the maturity of the loan. 4 [(va) ‘Capital Market Intermediaries (CMIs)’ shall mean regulated entities undertaking trade execution and market infrastructure services in capital markets, including broking, clearing, custody, market making or other incidental services. Provided that CMIs shall not include Standalone Primary Dealers and Qualified Central Counterparty (QCCPs).] (vb) ‘Cash and cash equivalents’ shall include cash, balances held in demand and term deposits placed with the lending bank and investments in units of overnight mutual funds (with a minimum haircut of 10 per cent).] (vi) ‘Co-acceptance of bills’ means an undertaking to make payment to the drawer of the bill (seller / exporter) on due date if the buyer / importer fails to make the payment on that date. (vii) 5 [‘Collateral Security’ or ‘Collateral’ means an asset on which a security charge is created in favour of the lender for securing a credit facility.] (viii) ‘Consumption Loan’ means any permissible loan that does not fit the definition of ‘income generating loan’ as defined subsequently. 6 [(viiia) ‘Control’ shall have the same meaning as defined in Section 2(27) of the Companies Act, 2013.] (ix) ‘Credit Event’ in the context of project finance exposures, shall be deemed to have been triggered on the occurrence of any of the following: (a) Default with any lender. (b) Any lender(s) determines a need for extension of the original / extended DCCO, as the case may be, of the project. (c) Expiry of original / extended DCCO, as the case may be. (d) Any lender(s) determines a need for infusion of additional debt. (e) The project is faced with financial difficulty as determined under the Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Directions, 2025 . (x) ‘Default Loss Guarantee (DLG)’ means a contractual arrangement, called by whatever name, between the bank and another entity, under which the latter guarantees to compensate the bank, for the loss due to default up to a certain percentage of the loan portfolio of the bank, specified upfront. Any other implicit guarantee of similar nature, linked to the performance of the loan portfolio of the bank and specified upfront, shall also be covered under the definition of DLG. (xi) ‘Digital Lending’ means a remote and automated lending process, largely by use of seamless digital technologies for customer acquisition, credit assessment, loan approval, disbursement, recovery, and associated customer service. (xii) ‘Digital Lending Apps / Platforms’ (DLAs) means a mobile and / or web-based applications, on a standalone basis or as a part of suite of functions of an application with user interface that facilitate digital lending services. DLAs shall include applications of the bank as well as those operated by Lending Service Provider (LSP) engaged by bank for extending any credit facilitation services in conformity with extant outsourcing guidelines issued by the Reserve Bank. (xiii) ‘Date of Financial Closure’ means the date on which the capital structure of the project, including equity, debt, grant (only in the case of infrastructure PPP projects) (if any), accounting for minimum 90 per cent of total project cost, becomes legally binding on all stakeholders. Explanation: In the case of CRE-RH projects, lenders may reckon contingent sales receivables (if any) as part of promoters’ contribution to the project. (xiv) ‘Default’ means the non-payment of debt (as defined in Insolvency and Bankruptcy Code (IBC), 2016) when whole or any part or instalment of the debt has become due and payable and is not paid by the debtor. 7 [(xiva) ‘Eligible Securities’ shall include the following securities: (a) Listed Group-1 equity shares and preference shares; Explanation: Group 1 securities as defined under instructions issued by Securities and Exchange Board of India (SEBI) (b) Government Securities, including Treasury Bills and Sovereign Gold Bonds; (c) Listed Debt Securities, including Convertible Debt Securities, rated BBB or higher; Explanation: Debt securities as defined under Section 2(1)(k) of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 dated August 9, 2021, as updated from time to time. (d) Units of Mutual Fund Schemes which are listed or where repurchase/redemption facility is available for such units through the Asset Management Company, with underlying investments in equity, equity related instruments or debt instruments. (e) Units of Exchange Traded Funds (excluding gold, silver and any other commodity ETFs) (f) Units of Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).] (xv) ‘Extended DCCO’: If the original DCCO is revised, then the revised DCCO shall be termed as the Extended DCCO. 8 [(xva) ’Gold Metal Loans’ (GML) mean loans extended by eligible banks to specified borrowers in the form of gold metal. (a) ’GMS-linked GML’ means GML extended by designated banks under the Gold Monetization Scheme, 2015 (GMS), utilising – (i) the gold deposit accepted by them as Short Term Bank Deposit under the GMS, or (ii) gold borrowed from other designated banks under GMS, and where the repayment can be either in gold or in cash or in a combination of both. (b) ’Import-linked GML’ means GML extended by nominated banks authorized to import gold, where the source of gold metal lent is gold imported by them, and where repayment has to be necessarily in cash.] (xvi) ‘Guarantee’ means a contract to perform the promise, or discharge the liability, of a third person in the contingent case of his non-performance or default, in terms of The Indian Contract Act, 1872. (xvii) ‘Guarantor’ means the party which issues the guarantee. (xviii) ‘Income Generating Loan’ means loans extended for the purpose of productive economic activities, such as farm credit, loans for business or commercial purposes, loans for creation or acquisition of productive assets etc. (xix) ‘Infrastructure Sector’ shall include the sub-sectors included in the Harmonised Master List of Infrastructure sub-sectors issued by the Department of Economic Affairs, Ministry of Finance, Government of India. (xx) ‘Interest During Construction’ (IDC) means the interest accrued on debt provided by a lender and capitalised during the construction phase of the project. (xxi) ‘Jewellery’ means items that are designed to be worn as personal adornments. (xxii) ‘Lending Service Provider’ (LSP) means an agent of the bank (including another bank) who carries out one or more of bank’s digital lending functions, or part thereof, in customer acquisition, services incidental to underwriting and pricing, servicing, monitoring, recovery of specific loan or loan portfolio on behalf of the bank in conformity with extant outsourcing guidelines issued by the Reserve Bank. Provided that, while entities offering only Payment Aggregator (PA) services in terms of the extant instructions issued by the Reserve Bank shall remain out of the ambit of these Directions, any PA also performing the role of an LSP shall comply with Chapter III of these Directions. 9 [(xxiia) ‘Loan to Value (LTV)’ shall mean the ratio of the outstanding loan amount to the value of the securities as on any given day. (xxiib) ‘Margin’ shall mean the contribution of the borrower, either in the form of cash or other liquid assets, for the purpose of purchasing or borrowing a security with bank finance or obtaining a non-fund-based facility from bank. (xxiic) ‘Non-financial company’ shall mean an entity not primarily engaged in undertaking financial activities, and in the context of domestic entities, shall refer to a non-banking institution which is a company but not included in the definition of a ‘financial institution’ or a ‘non-banking financial company’ as per the RBI Act, 1934.] (xxiii) ‘Normal transit period’ means the average period normally involved from the date of negotiation / purchase / discount till the receipt of bill proceeds in the Nostro account of the bank concerned, as prescribed by FEDAI from time to time. Explanation: It is clarified that it is not the time taken for the arrival of goods at overseas destination. (xxiv) ‘Obligor’ in the context of Chapter XVI of these Directions means a party against whose obligations, financial or otherwise, a NFB facility has been issued. In the case of guarantees, the obligor may also be termed as ‘principal debtor’, as defined under the Indian Contract Act, 1872. (xxv) ‘Original DCCO’ means the date, as envisaged at the time of financial closure, by which the project is expected to be put to commercial use and completion certificate / provisional completion certificate, or its equivalent, is expected to be issued to the concessionaire / project developer / promoter. Provided that, in the case of CRE and CRE-RH projects, original DCCO shall be the date on which Occupancy Certificate, or its equivalent, is expected to be obtained from the competent authority. (xxvi) ‘Ornaments’ means items meant for use as adornment of any object, decorative items, or utensils, excluding those items that fall under the definition of jewellery as defined previously. (xxvii) ‘Overdue bill’ in the case of a demand bill means a bill which is not paid before the expiry of the normal transit period, plus grace period. In the case of a usance bill, it refers to a bill which is not paid on the due date. (xxviii) ‘Post-shipment Credit’ means any loan or advance granted or any other credit provided by the bank to an exporter of goods / services from India from the date of extending credit after shipment of goods / rendering of services to the date of realisation of export proceeds, and includes any loan or advance granted to an exporter, in consideration of, or on the security of any duty drawback allowed by the Government from time to time. (xxix) ‘Pre-shipment’ / ‘Packing Credit’ means any loan or advance granted or any other credit provided by the bank to an exporter for financing the purchase, processing, manufacturing or packing of goods prior to shipment / working capital expenses towards rendering of services on the basis of letter of credit opened in his favour or in favour of some other person, by an overseas buyer or a confirmed and irrevocable order for the export of goods / services from India or any other evidence of an order for export from India having been placed on the exporter or some other person, unless lodgement of export orders or letter of credit with the bank has been waived. (xxx) ‘Primary Gold’ and ‘Primary Silver’ means gold and silver in any form other than in the form of a jewellery, ornaments and coins. 10 [(xxxa) ‘Primary Security’ shall mean security created on assets which have been financed out of the credit facility extended to the borrower.] (xxxi) ‘Project’ in the context of Chapter VII of these Directions means a venture undertaken through capital expenditure (involving current and future outlay of funds) for creation / expansion / upgradation of tangible assets and / or facilities in the expectation of stream of cash flow benefits extending far into the future. Projects usually have the characteristics of a long gestation period, irreversibility and substantial capital outlays. (xxxii) ‘Project Finance’ in the context of Chapter VII of these Directions refers to the method of funding a project in which the revenues to be generated by the funded project serve as the primary security for the loan, and also as a source of repayment. Project finance may take the form of financing the construction of a new capital installation (greenfield), or financing an improvement / enhancement in the existing installation (brownfield). For the purpose of these Directions, an exposure shall qualify as a project finance exposure only if the following conditions are satisfied: (a) The pre-dominant source of repayment as envisaged at the time of financial closure (i.e., at least 51 per cent) must be from cash flows arising from the project which is being financed. (b) All the lenders have a common agreement with the debtor. Explanation: A common agreement may have different loan terms (except original / extended / actual DCCO as specified in paragraph 76 of these Directions) for each of the lender provided the same has been agreed upon by the debtor and all the lender(s) to the project. (xxxiii) ‘Restructuring’ shall have the same meaning as specified under Reserve Bank of India (Commercial Banks - Resolution of Stressed Assets), Directions, 2025 . (xxxiv) ‘Resolution Plan’ (RP) shall have the same meaning as specified under Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Directions, 2025 (xxxv) ‘Secured portion of an NFB facility’ means the portion of the facility covered by realisable value of tangible security/ collateral estimated on a realistic basis. (xxxvi) ‘Top-up Loan’ in the context of Chapter IV of these Directions means an additional loan sanctioned over and above an outstanding loan, during the tenor of the original loan, based on the strength of the collateral already pledged for the existing loan. (2) All other expressions unless defined herein shall have the same meanings as have been assigned to them under the Banking Regulation Act, 1949 or the Reserve Bank of India Act, 1934, or any statutory modification or re-enactment thereto or in other relevant directions issued by the Reserve Bank or as used in commercial parlance, as the case may be. Chapter II - Role of The Board 5. A bank shall put in place a Board-approved credit policy covering, inter alia, the areas specified below, to the extent such activities are undertaken by it. The specific aspects to be addressed in such a policy are detailed in the relevant paragraphs of these Directions. (1) Digital Lending including DLG (2) Lending Against Gold and Silver Collateral (3) Gold Metal Loans (4) Microfinance Loans (5) Project Finance (6) 11 [Credit Facilities to Real Estate Sector, including Housing Finance] (7) Finance to NBFCs (8) Issue of Non-Fund Based Credit Facilities like guarantee, letter of credit, co-acceptance, partial credit enhancement. (9) Discounting / Rediscounting of Bills (10) Export Credit (11) 12 [Loan Against Financial Assets including eligible securities] (12) Credit Facilities to Overseas Joint Ventures (JV) (13) 13 [Bridge Finance] (14) Exposure to Infrastructure Investment Trusts (InvITs) 14 [(15) Acquisition Finance, including financing extended by overseas branches of Indian banks. (16) Credit Facilities to Capital Market Intermediaries (CMIs)] 15 [ Chapter IIA: Credit Facilities Linked to Specific Payment Instruments 5A. Notwithstanding the mode / channel of credit delivery or the type of payment instrument and / or underlying technology used for its disbursement, the prudential treatment of an underlying credit facility, including pre-sanctioned credit lines meant for payment transactions through UPI, shall be solely determined by the nature of the underlying credit facility, governed in terms of the applicable prudential norms. 5B. Any credit facility which is designed to be linked to a specific payment mode, shall have its terms and conditions included in the bank's credit policy and shall comply with all other applicable regulatory requirements. Explanation – For avoidance of any doubt, it is clarified that only such credit facilities as are otherwise permitted to be sanctioned by a bank under the extant regulations, can be offered as part of any such arrangement. 5C. The above instructions shall be without derogation to the provisions of any other law or regulation in relation to transactions effected through any payment mechanism.] Chapter III - Digital Lending Guidelines A. General Requirements for bank-LSP Arrangements 6. Due diligence requirements with respect to LSPs (1) Digital lending by a bank involving a LSP, shall be carried out under a contractual agreement between the bank and the LSP, which clearly defines the respective roles, rights, and obligations of each party thereto. (2) A bank shall conduct enhanced due diligence before they enter into an agreement with a LSP for digital lending, taking into account LSP’s technical capabilities, robustness of data privacy policies and storage systems, fairness in conduct with borrowers, past records of conduct and ability to comply with all applicable regulations and statutes. (3) A bank shall carry out periodic review of the conduct of the LSP vis-à-vis the terms of the contractual agreement and shall take appropriate action in the event of any deviation therefrom. (4) A bank shall lay down, as part of its policy, suitable monitoring mechanisms for the loan portfolios originated with the support of LSPs. (5) A bank shall impart necessary guidance to LSP acting as a recovery agent, to discharge their duties responsibly and ensure that LSP complies with the applicable instructions in Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Directions, 2025 . (6) A bank shall continue to conform to the extant guidelines on outsourcing as detailed in Reserve Bank of India (Commercial Banks – Managing Risks in Outsourcing) Directions, 2025 and shall ensure that the LSPs engaged by it and the DLAs (either of the bank or of the LSPs engaged by the bank) comply with these Directions. (7) As an overarching principle, any outsourcing agreement entered into by a bank with an LSP shall in no manner dilute or absolve the bank of its obligations under any statutory or regulatory provision, and the bank shall remain fully responsible and liable for all acts and omissions of the LSP. 7. Bank-LSP arrangements involving multiple lenders In cases where an LSP has agreements with multiple lenders for digital lending, each lender shall ensure the following: (1) An LSP shall provide a digital view of all the loan offers matching the borrower’s request on the DLA which meets the requirement of the borrower. The name of the unmatched lenders shall also be disclosed in the digital view. (2) While the LSP may adopt any mechanism to match the request of borrowers with the lender(s) to offer a loan, it shall follow a consistent approach for similarly placed borrowers and products. The mechanism adopted by the LSP and any subsequent changes to this mechanism shall be properly documented. (3) The digital view of loan offers from matching lenders shall include the name(s) of the lender(s) extending the loan offer, amount and tenor of loan, APR, monthly repayment obligation and penal charges (if applicable), in a way which enables the borrower to make a fair comparison between various offers. A link to the KFS shall also be provided in respect of each of the lender. (4) The content displayed by the LSP shall be unbiased, objective and shall not directly / indirectly promote or push a product of a particular lender, including the use of dark patterns / deceptive patterns designed to mislead borrowers into choosing a particular loan offer. However, ranking of loan offers based on a publicly pre-disclosed metric for such ranking shall not be construed as promoting a particular product. Explanation: Dark patterns shall have the same meaning as defined under section 2(e) of the ‘Guidelines for Prevention and Regulation of Dark Patterns, 2023’ dated November 30, 2023, issued by Central Consumer Protection Authority, and as amended from time to time. B. Conduct and Customer Protection Requirements 8. Assessing the borrower’s creditworthiness (1) A bank shall obtain the necessary information relating to economic profile of the borrower with a view to assessing the borrower’s creditworthiness before extending any loan, including, at a minimum, age, occupation and income details. The same shall be kept on record for audit purposes. (2) A bank shall ensure that there is no automatic increase in credit limit unless an explicit request is received, evaluated and kept on record from the borrower for such increase. 9. Disclosures to borrowers (1) A bank shall provide a Key Fact Statement (KFS), as per instructions contained in Reserve Bank of India (Commercial Banks - Responsible Business Conduct), Directions, 2025 . (2) As regards penal charges, a bank shall be guided by Reserve Bank of India (Commercial Banks - Responsible Business Conduct), Directions, 2025 . (3) A bank shall ensure that digitally signed documents (on the letter head of the bank) viz., KFS, summary of loan product, sanction letter, terms and conditions, account statements, privacy policies of the bank / LSP with respect to storage and usage of borrowers’ data, etc. shall automatically flow to the borrower on the registered and verified email / SMS upon execution of the loan contract / transactions. Explanation: Digitally signed documents shall be in compliance with the provisions of the Information Technology Act, 2000, as amended from time to time. (4) The bank shall maintain a website of their own in public domain, which shall be kept up to date, inter-alia, with the following details at a prominent single place on the website for ease of accessibility: (i) Details of all of its digital lending products and its DLAs. (ii) Details of LSPs and the DLAs of the LSPs along with the details of the activities for which they have been engaged for. (iii) Particulars of bank’s customer care and internal grievance redressal mechanism. (iv) Link to the Reserve Bank’s Complaint Management System (CMS) and Sachet Portal. (v) Privacy policies and other details as required under extant guidelines of the Reserve Bank. (5) A bank shall ensure that DLAs / LSPs have links to the above website of the bank. (6) In case of a loan default, when a recovery agent is assigned for recovery or there is a change in the recovery agent already assigned, the particulars of such recovery agent authorised to approach the borrower for recovery shall be communicated to the borrower through email / SMS before the recovery agent contacts the borrower for recovery. 10. Loan disbursal, servicing, and repayment (1) Disbursement of loan by a bank shall always be made into the bank account of the borrower except for disbursals covered exclusively under statutory or regulatory mandate (of the Reserve Bank or of any other regulator), flow of money between lenders for co-lending transactions and disbursals for specific end use, provided the loan is disbursed directly into the bank account of the end-beneficiary. The bank shall ensure that in no case, disbursal is made to a third-party account, including the accounts of LSP, except as provided in this Chapter. Provided that, advances against salary, where the loan is disbursed directly to the bank account of the borrower, but the repayment is from the corporate employer, can be allowed subject to the condition that the loan is repaid by the corporate employer by deducting the amount from the borrower’s salary. However, it must be ensured that LSPs do not have any control over the flow of funds directly or indirectly in such transactions and that repayment is directly from the bank account of the employer to the bank. Explanation: Co-lending arrangements shall be governed by the Reserve Bank of India (Commercial Banks – Transfer and Distribution of Credit Risk) Directions, 2025 , subject to the condition that no third party other than the lenders in a co-lending transaction shall have direct or indirect control over the flow of funds at any point of time. (2) A bank shall ensure that all loan servicing, repayment, etc. is executed by the borrower directly in the bank’s account without any pass-through account / pool account of any third party, including the accounts of LSP. (3) The flow of funds between the bank accounts of the borrower and the bank shall not be controlled either directly or indirectly by a third-party, including the LSP. (4) A bank shall ensure that any fees, charges, reimbursements, etc. payable to LSP are paid directly by the bank and are not charged to or collected from the borrowers separately by LSP. (5) In case of delinquent loans, a bank may deploy physical interface to recover loans in cash, wherever necessary. In order to afford operational flexibility to the bank, such transactions are exempted from the requirement of direct repayment of loan in the bank’s account. However, any recovery by cash shall be duly reflected in full in the borrower’s account on the same day and the bank shall ensure that any fees, charges, etc., payable to LSPs for such recovery are paid directly by the bank and are not charged by LSP to the borrower either directly or indirectly from the recovery proceeds. 11. Cooling-off period (1) The borrower shall be given an explicit option to exit a digital loan by paying the principal and the proportionate APR without any penalty during an initial “cooling-off period”. The cooling off period shall be determined by the bank in terms of its credit policy, subject to the period so determined not being less than one day. For borrower continuing with the loan even after cooling-off period, pre-payment shall continue to be allowed as per the Reserve Bank of India (Commercial Banks - Responsible Business Conduct) Directions, 2025 . (2) The bank may retain a reasonable one-time processing fee, if the customer exits the loan during the cooling-off period. This, if applicable, shall be disclosed to the customer upfront in KFS. 12. Grievance redressal (1) A bank, and its LSP which has an interface with the borrower, shall designate nodal grievance redressal officers to deal with digital lending related complaints / issues raised by the borrower. (2) Contact details of the nodal grievance redressal officers shall be prominently displayed on the websites of the bank, its LSP and on the DLA, as well as in the KFS provided to the borrower. (3) The facility of lodging complaint shall also be made available on the DLA and on the website as stated above. It is reiterated that responsibility of grievance redressal shall continue to remain with the bank. (4) If any complaint lodged by the borrower against the bank or the LSP engaged by the bank is rejected wholly or partly by the bank, or the borrower is not satisfied with the reply; or the borrower has not received any reply within 30 days of receipt of complaint by the bank, the said borrower can lodge a complaint over the Complaint Management System (CMS - https://cms.rbi.org.in/ ) portal under the Reserve Bank-Integrated Ombudsman Scheme (RB-IOS - Issued vide Notification CEPD.PRD. No.S873/13.01.001/2021-22 dated November 12, 2021 ) or send a physical complaint to "Centralised Receipt and Processing Centre, 4th Floor, Reserve Bank of India, Sector-17, Central Vista, Chandigarh - 160017" as per the grievance redressal mechanism prescribed by the Reserve Bank. This information shall be suitably conveyed to the borrower. C. Technology and Data Requirement 13. Collection, usage and sharing of data with third parties (1) A bank shall ensure that any collection of data by its DLA and DLA of its LSP is need-based and with prior and explicit consent of the borrower having audit trail. In any case, the bank shall also ensure that DLA of the bank / LSP desist from accessing mobile phone resources like file and media, contact list, call logs, telephony functions, etc. A one-time access can be taken for camera, microphone, location or any other facility necessary for the purpose of on-boarding / KYC requirements only, with the explicit consent of the borrower. (2) The borrower shall be provided with an option to give or deny consent for use of specific data, restrict disclosure to third parties, data retention, revoke consent already granted to collect personal data and if required, make the bank / LSP delete / forget the data. (3) The purpose of obtaining borrowers’ consent needs to be disclosed at each stage of interface with the borrowers. (4) Explicit consent of the borrower shall be taken before sharing personal information with any third party, except for cases where such sharing is required as per statutory or regulatory requirement. 14. Storage of data (1) A bank shall ensure that LSP engaged by them do not store personal information of borrower except some basic minimal data (viz., name, address, contact details of the customer, etc.) that may be required to carry out their operations or service within the scope of the bank-LSP agreement. Responsibility regarding data privacy and security of the customer’s personal information on an ongoing basis shall be that of the bank. (2) A bank shall ensure that clear policy guidelines regarding the storage of customer data including the type of data that can be stored, the length of time for which data can be stored, restrictions on the use of data, data destruction protocol, standards for handling security breach, etc., are put in place and also disclosed by the bank and the LSP engaged by the bank prominently on their website and DLA at all times. (3) A bank shall ensure that no biometric data is stored / collected by them and LSP, unless allowed under extant statutory guidelines. (4) A bank shall ensure that all data is stored only in servers located within India, while ensuring compliance with statutory obligations / regulatory instructions. Further, in case the data is processed outside India, the same shall be deleted from servers outside India and brought back to India within 24 hours of processing. 15. Comprehensive privacy policy (1) A bank and LSPs engaged by the bank shall have a comprehensive privacy policy compliant with applicable laws, associated regulations and the Reserve Bank guidelines which shall be made available publicly on the website of the bank and LSP, as the case may be. (2) Details of third parties (where applicable) allowed to collect personal information through the DLA shall also be disclosed in the privacy policy. 16. Technology standards A bank shall ensure that they and the LSPs engaged by them comply with various technology standards / requirements on cybersecurity stipulated by the Reserve Bank and other relevant agencies, or as may be specified from time to time, for undertaking digital lending. D. Reporting of Credit Information and DLAs 17. Reporting to Credit Information Companies (CICs) (1) As per the provisions of the Credit Information Companies (CIC) (Regulation) Act, 2005; CIC Rules, 2006; CIC Regulations, 2006 and related guidelines issued by the Reserve Bank from time to time, a bank shall ensure that any lending done through their DLAs and / or DLAs of LSPs is reported by them to CICs irrespective of its nature / tenor. (2) Extension of structured digital lending products by a bank and / or LSPs engaged by the bank over a merchant platform involving short term, unsecured / secured credits or deferred payments, need to be reported to CICs by the bank. The bank shall ensure that LSPs, if any, associated with such deferred payment credit products shall abide by the extant outsourcing guidelines issued by the Reserve Bank and be guided by the instructions contained in this Chapter. 18. Reporting of DLAs to the Reserve Bank (1) The bank shall report all DLAs deployed / joined by them, whether their own or those of the LSPs, either exclusively or as a platform participant, on the Centralised Information Management System (CIMS) portal of the Reserve Bank in the requisite format as given in the Annex - I to these Directions. (2) The bank shall update the aforesaid list as and when additional DLA(s) are deployed or the engagement with the existing DLA(s) ceases to exist by filing the updated data in the CIMS portal. (3) The Chief Compliance Officer of the bank or any other official designated by the Board of the bank for the purpose shall certify that the data on DLAs submitted by them on the CIMS portal is correct and the DLAs are compliant with all the extant regulatory instructions, including the provisions of this Chapter. (4) Without prejudice to the generality of the above, the Chief Compliance Officer / other official designated by the Board of the bank shall certify the following aspects: (i) DLAs have link to the bank’s website where further information about the loan products, the lender, the LSP, particulars of customer care, link to Sachet Portal, privacy policies, etc. can be accessed by the borrower. (ii) DLAs (in case owned by LSP), have appointed a suitable nodal grievance redressal officer to deal with digital lending related complaints / issues raised by the borrower, details of which are prominently available on the respective DLA. (iii) Data collection and storage by DLAs is in compliance with paragraphs 13 and 14 of these Directions and other statutory and regulatory requirements, as applicable from time to time. (iv) The DLA’s particulars submitted by the bank are also suitably disclosed on the bank’s website as required under paragraph 9(4) of these Directions. (5) The bank shall ensure the correctness and timeliness of information regarding DLAs, as the data, as submitted by the bank on CIMS, shall be published on the website of the Reserve Bank in an automated manner and the Reserve Bank shall not verify / validate the data submitted on CIMS. All issues and grievances of customers concerning DLAs shall be addressed and dealt with by the bank directly. (6) The bank shall ensure that the inclusion of any third party DLAs deployed by them as part of above reporting, shall not be construed by the DLAs or any associated entity as conferring any form of registration, authorization, or endorsement by the Reserve Bank. The bank shall also ensure that such inclusion is not misrepresented in any marketing, promotional, or other materials issued by or on behalf of the DLAs. E. Loss sharing arrangement in case of default 19. Eligibility as Default Loss Guarantee (DLG) provider A bank may enter into DLG arrangements only with a LSP / other lender engaged as an LSP. Further, the LSP providing DLG shall be incorporated as a company under the Companies Act, 2013. 20. Due diligence and other requirements with respect to DLG provider (1) A bank, including a bank acting as DLG provider, shall lay down, as part of its policy, the eligibility criteria for DLG provider, nature and extent of DLG cover, process of monitoring and reviewing the DLG arrangement, and the details of the fees, if any, payable to / received by the DLG provider, as the case may be, before entering into any DLG arrangement. (2) A bank shall ensure that any DLG arrangement does not act as a substitute for credit appraisal requirements and robust credit underwriting standards need to be put in place irrespective of the DLG cover. (3) Every time a bank enters into or renews a DLG arrangement, it shall obtain adequate information to satisfy itself that the entity extending DLG would be able to honour it. Such information shall, at a minimum, include a declaration from the DLG provider, certified by the statutory auditor of the DLG provider, on the aggregate DLG amount outstanding, the number of lenders and the respective number of portfolios against which DLG has been provided. The declaration shall also contain past default rates on similar portfolios. (4) It is clarified that the due-diligence requirements specified herein are in addition to the general requirements applicable to bank-LSP arrangements as set out in paragraph 6 of these Directions. 21. Restrictions on entering into DLG arrangements (1) A bank shall not enter into DLG arrangements for revolving credit facilities offered through digital lending channel and credit cards as defined under Reserve Bank of India (Commercial Banks – Credit Cards and Debit Cards: Issuance and Conduct) Directions, 2025 . (2) The bank shall not enter into DLG arrangements on the loans which are covered by the credit guarantee schemes administered by trust funds as specified under Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025 . 22. Structure of DLG arrangements DLG arrangements shall be backed by an explicit and legally enforceable contract between the bank and the DLG provider. Such contract, among other things, shall contain the following details: (1) Extent of DLG cover. (2) Form in which DLG cover is to be maintained with the bank. (3) Timeline for DLG invocation. (4) Disclosure requirements as under paragraph 28 of these Directions. 23. Forms of DLG A bank shall accept DLG only in one or more of the following forms: (1) Cash deposited with the bank. (2) Fixed Deposit maintained with a Scheduled Commercial Bank with a lien marked in favour of the bank. (3) Bank Guarantee in favour of the bank. 24. Cap on DLG (1) A bank shall ensure that the total amount of DLG cover on any outstanding portfolio which is specified upfront shall not exceed five per cent of the total amount disbursed out of that loan portfolio at any given time. In case of implicit guarantee arrangements, the DLG Provider shall not bear performance risk of more than the equivalent amount of five per cent of the underlying loan portfolio. (2) The portfolio over which DLG can be offered shall consist of identifiable and measurable loan assets which have been sanctioned (the ‘DLG set’). This portfolio shall remain fixed for the purpose of DLG cover and is not meant to be dynamic. (3) Illustrative examples on cap on DLG: Illustration I Assume that as on April 1, 2024 the bank earmarks a portfolio of ₹40 crore (out of the total sanctioned loans) under a DLG arrangement (DLG set). This portfolio shall remain "frozen" for the purpose of the specific DLG arrangement - meaning that no loan assets can be added or removed from it, except through loan repayment/ write-off. The bank can have such multiple DLG sets. The ceiling for DLG cover on such portfolio shall be fixed at ₹2 crore (5 per cent of ₹40 crore), which shall get activated proportionately as and when the loans are disbursed. Illustration II Assume that out of the above DLG set, loans amounting to ₹10 crore are disbursed immediately. Then as on April 1, 2024, the DLG cover available for the portfolio shall be ₹0.5 crore (5 per cent of disbursed). Subsequently, if loans of ₹10 crore are further disbursed on April 15, 2024, the DLG cover shall proportionately increase to ₹1 crore effective April 15, 2024. (Refer table below also for summary of each case) Case 1: As on June 30, 2024, loans worth ₹5 crore mature without any default. In this case, the outstanding portfolio in the books of the bank would be ₹15 crore and the DLG cover shall remain at ₹1 crore. Case 2: Subsequently, there is a default of ₹2 crore during Q2-2024 and consequently the bank invokes the entire DLG of ₹1 crore (assuming that till date zero principal / interest have been received towards these loans). In this case, as of Sept 30, 2024 the outstanding portfolio in the books of the bank shall be ₹15 crore (₹20 crore original portfolio less ₹5 crore loans matured without default) but no headroom for DLG will be available as the maximum permissible DLG cover of ₹1 crore (5 per cent of disbursed) has been exhausted. Case 3: Going further, let’s assume that recovery worth ₹1 crore is made by the bank during October 2024 on the defaulted loans of ₹2 crore. In such a case, the amount of the outstanding portfolio in the books of the bank as on October 31, 2024 shall come down to ₹14 crore (₹20 crore original portfolio less ₹5 crore loans matured without any default less ₹1 crore loans which were in default and recovered). However, the recovery amount of ₹1 crore cannot be added to reinstate the DLG cover. (figures in ₹ crore) Period Disbursed Loan maturing without default Default Amount DLG Invoked Recovery/ Write-off Outstanding Portfolio Available DLG Cover Initial Position 10 - - - - 10 0.5 Further disbursement 10 - - - - 20 1 Case 1 20 5 - - - 15 1 Case 2 20 5 2 1 - 15 0 Case 3 20 5 2 1 1 14 0 25. Recognition of NPA (1) Recognition of individual loan assets in the portfolio as Non-Performing Asset (NPA) and consequent provisioning shall be the responsibility of the bank as per the Reserve Bank of India (Commercial Banks – Income Recognition, Asset Classification and Provisioning) Directions, 2025 irrespective of any DLG cover available at the portfolio level. (2) The amount of DLG invoked shall not be set off against the underlying individual loans, i.e. the liability of the borrowers in respect of the underlying loan shall remain unaffected. (3) Recovery by a bank, if any, from the loans on which DLG has been invoked and realised, can be shared with the DLG provider in terms of the contractual arrangement. (4) DLG amount once invoked by the bank shall not be reinstated, including through loan recovery. 26. Treatment of DLG for regulatory capital (1) Capital computation, i.e., computation of exposure and application of Credit Risk Mitigation benefits on individual loan assets in the portfolio shall continue to be governed by the Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025 . (2) In case, DLG provider is a bank, it shall deduct full amount of the DLG which is outstanding from its capital. 27. Invocation and tenor of DLG (1) A bank shall invoke DLG within a maximum overdue period of 120 days, unless the loan dues are made good by the borrower before that. (2) The period for which the DLG agreement remains in force shall not be less than the longest tenor of the loan in the underlying loan portfolio. 28. Disclosure requirements (1) The bank shall put in place a mechanism to ensure that LSPs with whom they have a DLG arrangement shall publish on their website the total number of portfolios and the respective amount of each portfolio on which DLG has been offered. The name of the lender(s) may or may not be disclosed as part of disclosure under this provision. (2) Disclosure under paragraph (1) above shall be made on a monthly basis, with the disclosure for any given month to be provided no later than seven working days following the conclusion of that month. 29. Exceptions Guarantees covered under the following schemes / entities shall not be covered within the definition of DLG: (1) Guarantee schemes of Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), Credit Risk Guarantee Fund Trust for Low Income Housing (CRGFTLIH) and individual schemes under National Credit Guarantee Trustee Company Ltd (NCGTC). (2) Credit guarantee provided by Bank for International Settlements (BIS), International Monetary Fund (IMF) as well as Multilateral Development Banks as referred to in Reserve Bank of India (Commercial Banks – Prudential Norms on Capital Adequacy) Directions, 2025 . F. General Provisions 30. EMI programmes on Credit Card are governed specifically by the Reserve Bank of India (Commercial Banks – Credit Cards and Debit Cards: Issuance and Conduct) Directions, 2025 . Such transactions shall not be covered under this Chapter. However other loan products offered on Credit Cards which are not covered / envisaged under the aforesaid Directions shall be governed by the stipulations laid down under this Chapter. Further, this Chapter shall also be applicable to all loans offered on Debit Card, including EMI programmes. 31. DLG arrangements entered between a bank and their LSP conforming to the instructions laid down in this Chapter shall neither be treated as “synthetic securitisation” as defined under the Reserve Bank of India (Commercial Banks – Securitisation Transactions) Directions, 2025 , nor attract the provisions of ‘loan participation’ as defined under the Reserve Bank of India (Commercial Banks – Transfer and Distribution of Credit Risk) Directions, 2025 . Chapter IV - Lending against Gold and Silver Collateral Background: Reserve Bank has restricted lending against primary gold such as gold bullion due to broader macro-prudential concerns as also due to speculative and non-productive nature of gold. However, banks have been permitted to lend against the collateral security of gold jewellery, ornaments and coins for meeting the short-term financing needs of borrowers. The extant regulations are guided, inter alia, by the objective of providing the borrowers an avenue to tide over their tight liquidity conditions by leveraging the gold jewellery, ornaments or coins that are kept idle, while simultaneously addressing the risks for the lenders. Similar concerns and objectives guide a few regulations issued in the past on lending against the collateral of silver. 32. 16 [*****] A. General Provisions 33. The credit policy (hereinafter called the policy) of a bank, as required in terms of paragraph 5 of these Directions, shall include, inter alia, appropriate single borrower limits and aggregate limits for the portfolio of loans against collateral of jewellery, ornaments or coins made of gold or silver (“eligible collateral” for this Chapter); maximum LTV ratio permissible for such loans; action to be taken in cases of breach of LTV ratio; valuation standards and norms; and standards of gold and silver purity. The policy shall also include appropriate documentation to be obtained and maintained for loans proposed to be categorised under priority sector lending. 34. A bank may decide on a suitable approach for lending against eligible collateral as part of its credit risk management framework, consistent, inter alia, with the principle of proportionality and ease of access for small ticket loans. However, detailed credit assessment, including assessment of borrower’s repayment capacity shall be undertaken in case the total loan amount against eligible collateral is above ₹2.5 lakh to a borrower. Provided that in case of Bullet repayment loans, the threshold loan amount for detailed credit assessment shall be the total amount payable at maturity. 35. A bank may renew an existing loan or sanction a top-up loan upon a formal request from the borrower, subject to a credit assessment in accordance with paragraph 34. Such renewal or top-up shall be permitted only within the permissible LTV, and provided the loan is classified as standard. Further, renewal of bullet repayment loan shall be allowed only after payment of accrued interest, if any. The bank shall ensure that such renewals and top-ups are clearly identifiable in its Core Banking System or Loan Processing System. B. Restrictions and Ceilings 36. A bank shall not grant any advance or loan: (1) For purchase of gold in any form including primary gold, ornaments, jewellery, or coins, or for purchase of financial assets backed by gold, e.g., units of Exchange-traded funds (ETFs) or units of Mutual Funds; and (2) against primary gold or silver or financial assets backed by primary gold or silver. Provided that a bank may extend need-based working capital finance to borrowers who use gold or silver as a raw material or as an input in their manufacturing or industrial processing activity, where such gold or silver can also be accepted as security. A bank extending such finance shall ensure that borrowers do not acquire or hold gold for investment or speculative purposes. 37. A bank shall not extend a loan where ownership of the collateral is doubtful. A suitable document or declaration shall be obtained from the borrower in all cases to the effect that the borrower is the rightful owner of the eligible collateral. Multiple or frequent sanction of loans against eligible collateral to the same borrower, aggregating to a value in excess of a threshold to be decided by the lender, must be examined closely as part of the transaction monitoring under the anti-money laundering (AML) framework. 38. A bank shall not: (1) Avail loans by re-pledging gold or silver pledged to it by its borrowers. (2) Extend loans to other lenders, entities or individuals by accepting gold or silver collateral pledged to such lenders, entities, or individuals by their borrowers as collateral. For removal of doubt, it is clarified that the above provision does not preclude a lender from financing another lender against the security of underlying receivables. 39. Tenor of consumption loans in the nature of bullet repayment loans shall be capped at 12 months, which may be renewed in terms of paragraph 35. 40. Loans against ornaments and coins shall be subject to the following: (1) The aggregate weight of ornaments pledged for all loans to a borrower shall not exceed 1 kilogram for gold ornaments, and 10 kilograms for silver ornaments. (2) The aggregate weight of coin(s) pledged for all loans to a borrower shall not exceed 50 grams in case of gold coins, and 500 grams in case of silver coins. C. Valuation and Assaying of Gold and Silver collateral 41. Gold or silver accepted as collateral shall be valued based on the reference price corresponding to its actual purity (caratage). For this purpose, the lower of (1) the average closing price for gold or silver, as the case may be, of that specific purity over the preceding 30 days, or (2) the closing price for gold or silver, as the case may be, of that specific purity on the preceding day, as published either by the India Bullion and Jewellers Association Ltd. (IBJA) or by a commodity exchange regulated by the Securities and Exchange Board of India (SEBI) shall be used. 42. If price information for the specific purity is not directly available, the lender shall use the published price available for the nearest available purity and proportionately adjust the weight of the collateral based on its actual purity to arrive at valuation. 43. For the purpose of valuation, only the intrinsic value of the gold or silver contained in the eligible collateral shall be reckoned and no other cost elements, such as precious stones or gems, shall be added thereto. D. Loan to Value Ratio (LTV) 44. The maximum LTV ratio in respect of consumption loans against the eligible collateral shall not exceed LTV ratios as provided in the table below: Total consumption loan amount per borrower Maximum LTV ratio ≤ ₹2.5 lakh 85 per cent > ₹2.5 lakh & ≤ ₹5 lakh 80 per cent > ₹5 lakh 75 per cent Explanation: ‘Loan to Value (LTV) ratio’ on a day in this context means the ratio of the outstanding loan amount to the value of the pledged collateral or security, as the case may
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/DOR/2025-26/154 · issued 28 Nov 2025. The plain-English explanation above is BankPulse’s own independent summary.