RBI's proposed LTV rules may hit growth of gold loan companies

The Reserve Bank of India's (RBI) proposed rules on loans against gold jewellery could potentially hit the growth of specialised gold finance companies while also nudging them to change operational practices. According to Crisil Ratings, the central bank's April draft on gold loans aims to harmonise the regulatory framework across regulated entities and address differences in lending practices.

"If implemented in current form, the directions on loan-to-value (LTV) computation and breaches thereof can impact the growth prospects of gold-loan NBFCs as they will have to recalibrate their disbursement values," said Malvika Bhotika, director at Crisil.

In FY25, combined loans against gold jewellery portfolio of banks and NBFCs is estimated to have grown by over 50%. The growth was 104% for banks alone. Gold loans, having doubled through the year, emerged as the fastest-growing consumer credit segment in FY25, ET reported earlier. "Given that the directions are in the draft stage, the impact on the credit profiles of rated entities based on the final directions will bear watching," Crisil said.