New Delhi: The trend of taking loan against gold is increasing rapidly in the country, but now a worrying picture related to this business has emerged. (Gold Loan Default) There are a large number of borrowers who are not able to repay their loans on time and are facing difficulties in taking back the mortgaged gold. According to the latest report of TransUnion CIBIL, the rate of gold loan default has almost doubled in the last 5 months. By August 2026, the outstanding gold loan in the country has increased to the level of Rs 22.5 lakh crore.
The figures of the report show that as the gold loan market is growing rapidly, the pressure of delay in payment is also coming to the fore. The share of gold loans outstanding for more than 90 days increased from 0.2 percent in March 2026 to 0.3 percent in August 2026. This situation has increased the concern of the lending institutions as well as those who had mortgaged their family's gold jewelery in their time of need.
Gold loan default rate almost doubles in 5 months
According to TransUnion CIBIL report, the gold loan business in India has almost tripled in the last 3 years. By August 2026, its dues would reach Rs 22.5 lakh crore. Amidst this rapidly growing market, the issue of default in payment is also attracting attention. The outstanding share of borrowers who have not made payments for more than 90 days increased from 0.2 per cent to 0.3 per cent between March and August 2026.
This increase may appear small in percentage terms, but in the context of the larger loan market it cannot be ignored. The report states that the default rate has almost doubled in the last 5 months. This means that some customers taking gold loans are facing increasing payment pressure.
In gold loan, the customer fulfills his financial needs by pledging his gold jewellery. He gets his gold back only after repaying the loan. But default in payment may lead to auction of the mortgaged jewellery. In such a situation, the loss for the borrower is not limited to money only, but the family's gold property can also be lost.
RBI changed gold loan rules for small borrowers
Keeping in mind the growing market of gold loans and the interests of the customers, the Reserve Bank of India has issued Lending Against Gold and Silver Collateral Directions, 2025. It was necessary to implement these rules by April 1, 2026. This system applies to commercial banks, regional rural banks, co-operative banks and related non-banking financial institutions.
In the new framework, different limits of Loan to Value i.e. LTV have been fixed according to the loan amount. This means the maximum amount of loan a customer can get against the stipulated price of the pledged gold. For small loan borrowers, this system is more relief than before.
- Maximum LTV of 85 percent on gold loans up to Rs 2.5 lakh.
- 80 percent LTV on loans above Rs 2.5 lakh and up to Rs 5 lakh.
- Maximum 75 percent LTV on loans above Rs 5 lakh.
However, in case of loans above Rs 2.5 lakh, the bank will have to assess the loan repayment capacity of the customer. That means it will not be enough to approve the loan just by looking at the price of gold. The paying capacity of the customer will also have to be seen. Due to this, importance has been given to financial condition in the process of giving loan.
Changed valuation method to determine the price of gold
The process of determining the price of gold has also been clarified in the new rules of RBI. Now the lending institution will have to evaluate the pledged gold based on its actual purity and weight. To decide the price of gold, the lower of the average closing price of the last 30 days and the previous day's closing price will be taken as the basis.
In this process, the wages for making jewelery i.e. making charges and the cost of gems or other decorative items set in gold will not be included. This simply means that the loan will not be calculated on the total purchase price of the jewellery, but on the value of the actual gold present in it.
The lending institution will also be responsible for checking the purity and weight of the gold in the presence of the customer and keeping the evaluation process transparent. With this, an attempt has been made to reduce the scope for arbitrariness in determining the value of mortgaged jewellery. Detailed provisions of RBI Official guidelines related to gold and silver collateral Can be seen in.
Strict rules for gold auction in case of default
If a customer does not repay the loan on time, the bank or financial institution can auction his pledged gold. But under the new rules, emphasis has been laid on transparency in the auction process and providing information to the customer. It is necessary to give notice to the borrower before the auction. Apart from this, the reserve price for the auction will have to be kept at at least 90 percent of the current market price.
Its purpose is to avoid the situation of selling the customer's pledged gold at a very low price. A provision has also been made to publish public information about the auction in at least two newspapers. Of these, one should be a regional language daily and the other a national daily. With this, auction information will reach more people.
The tenure of consumption gold loan with bullet repayment has also been kept at a maximum of 12 months. In this way, rules related to payment and pledged gold have been fixed for both the customer and the lending institution. Details of these provisions Gold Loan News based on TransUnion CIBIL Report Can also be read in.
Big challenge for customers amid rising gold loans
The increasing business of gold loan and cases of default in payment are coming to the fore simultaneously. On one hand, customers are pledging gold jewelery for their needs, on the other hand, if timely installment or full payment is not made, it may be difficult to get the same gold back. This situation is especially a matter of concern for those families who do not have any asset other than gold as collateral.
The new rules of RBI have brought clarity regarding loan limit, gold valuation and auction process. But the most important thing for the borrower is that he should take gold loan only after understanding his repayment capacity. Getting more loan does not mean that taking that much amount will be right in every situation. Before pledging gold, it is important to understand the interest, payment period and timely repayment of the loan.
With the growth of the gold loan market in the times to come, it will be important to see what changes occur in cases of payment delays. At present, TransUnion CIBIL data shows that amidst the rising gold loans, the pressure on some borrowers is increasing and the challenge of getting back the pledged gold cannot be taken lightly.
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