RBI’s New Guidelines on Gold & Silver Loans: Why Lenders Need to Modernise

Understanding the RBI’s Framework

Gold-backed lending continues to be a resilient and rapidly growing segment in the formal credit landscape, offering borrowers quick access to liquidity without asset divestment.

With rising demand and increasing institutional participation, the Reserve Bank of India (RBI) has introduced a comprehensive regulatory framework aimed at strengthening practices, improving borrower safeguards, and bringing consistency across lenders.

The updated guidelines focus particularly on the Loan-to-Value (LTV) ratio, now calculated based on the total amount repayable at maturity.

In addition, the framework defines LTV caps, mandates valuation practices tied to actual purity and prevailing market prices and requires detailed Collateral Documentation.

It also specifies procedures for loan renewals, top-ups, and enforces strict timelines for collateral release, with penalties of ₹5,000 per day for delays caused by the lender.

To ensure overall compliance, lenders must also implement exposure limits, maintain clear loan classification, and provide accurate regulatory disclosures in their financial statements.

Operational Challenges in Meeting Compliance

Financial institutions may encounter challenges in aligning existing processes with new requirements from the RBI’s evolving regulatory landscape.

Legacy lending systems, while dependable, often lack the flexibility to apply differentiated LTV logic, automate valuation based on market-linked prices, or streamline workflows for renewals, collateral release, and valuation.

These limitations can increase operational effort, cause processing delays, and make the process more complex than necessary.

Why Modern Lending Platforms Matter

Meeting RBI’s expectations requires a modern lending software that is flexible in policy configuration, automated in valuation and documentation, responsive to borrower activity, and fully audit-ready and regulation-compliant.

Such platforms are equipped with dynamic rule engines, real-time valuation integrations, automated workflows, and customisable reporting tools, all of which are essential for efficiently managing gold and silver loans within the current regulatory landscape.

How Pennant Supports Compliance and Flexibility

pennApps Lending Factory (PLF) and the broader pennApps Studio suite provide a comprehensive solution tailored for gold and silver loan operations.

Key features include:

• Configurable LTV rules: Lenders can adjust percentage thresholds exactly as defined in RBI guidelines.
• Credit underwriting engine: Lenders can define the LTV calculation method and modify the percentage thresholds precisely in accordance with RBI guidelines.
• Built-in Limits Module: Supports borrower-level and portfolio-level exposure tracking.
• Collateral Classification and Valuation: Enables comprehensive configuration based on collateral type (e.g., ornaments, coins), purity levels, and associated attributes through extended fields. Supports real-time valuation and classification via integration with external systems through APIs.
• Agreement Generation: Automatically generates documents like collateral-specific reports, incorporating detailed information and valuation data ensuring transparency and compliance.
• Dynamic report configuration: Enables lenders to generate all required RBI disclosures and internal reports.
• Compliance-ready workflows: Automates interest verification, collateral release, borrower alerts, and compensation tracking.

Conclusion

The RBI’s regulatory expectations are clear: lenders are now required to ensure greater transparency, robust controls, and faster operational turnaround.

Meeting these evolving standards calls for systems that offer both compliance-readiness and agility.

Pennant, through its pennApps Lending Factory (PLF) and pennApps Studio, provides financial institutions with the tools and flexibility needed to adapt seamlessly, enabling them to stay compliant, responsive, and focused on delivering superior customer experiences.