The Association of Gold Loan Companies (AGLOC) has sought a six-month deferment of the Reserve Bank of India’s (RBI) revised guidelines on lending against gold and silver collateral, scheduled to come into effect from April 1, 2026. The industry body has made representations to the RBI, the Finance Ministry and the Department of Financial Services, citing heightened geopolitical uncertainty and potential risks to credit access.

“AGLOC fully supports the RBI’s intent to strengthen regulatory standards. Given the current environment and the need to ensure continued credit access, a calibrated deferment will enable a smoother and more effective implementation,” Thomas George Muthoot, Vice President, Association of Gold Loan Companies, said.

The gold lending industry lobby said the global environment remains uncertain, particularly due to the evolving conflict in the Middle East, which could disrupt energy and fuel supply chains, trigger inflationary pressures and affect cash flows of households and small businesses.

“Given the current environment, there is a temporary mismatch in customer cash flows driven by disruptions in business activity, particularly in segments linked to fuel, LPG, and logistics, along with increased cost of agricultural inputs affecting borrowers in the agriculture sector,” AGLOC said. It added that such conditions could disproportionately impact lower- and middle-income segments that depend on timely access to formal credit.

The request comes amid a sharp correction in gold prices. MCX spot gold prices fell 10% on Monday to ₹1,33,513 per 10 grams from the previous close of ₹1,46,640, and are down from a peak of ₹1,75,231 on January 29.

The correction follows a sharp rally over the past year that had prompted gold loan NBFCs and banks to expand lending. The decline now raises risks for lenders, as loans issued at elevated gold prices allowed borrowers to avail higher amounts against the same collateral. As prices fall, the value of that collateral erodes, reducing the safety buffer and increasing the risk of under-collateralisation or losses in case of defaults.

The association, therefore, seeks the implementation be kept in abeyance for six months, or until there is greater clarity and stabilisation in the external environment, arguing that a phased rollout would ensure a smoother transition without disrupting credit flow.

In June 2025, the RBI had issued comprehensive revised norms for loans against gold and silver jewellery, aimed at harmonising lending practices across banks, NBFCs, cooperative banks and housing finance companies. Under the new framework, loans up to ₹2.5 lakh can have a loan-to-value (LTV) ratio of up to 85%, higher than the earlier 75%. Loans between ₹2.5 lakh and ₹5 lakh are capped at 80%, while those above ₹5 lakh are limited to 75%.

The central bank has also tightened rules for bullet repayment loans, mandating that loans where principal and interest are repaid at maturity must be settled within 12 months. The LTV for such loans will now be calculated on the total repayment due at maturity, rather than the disbursed amount, to prevent breaches and ensure compliance through the loan tenure.