How much can you actually raise against your gold?

Why this number is lower than you were told

RBI tiers the gold LTV by the total consumption gold loan per borrower — not per loan:

The bit everyone misses. For a bullet loan, RBI is explicit: “the LTV calculation shall take into account the total amount repayable at maturity.” Your interest accrues into that figure. So the tier applies to principal plus accrued interest — and the amount you can actually draw is smaller than LTV × gold value. On ₹5 lakh of gold at 12% over 12 months, the naive answer is ₹4,00,000; the real permissible draw is about ₹3,54,980.

Three things RBI does not do

• No LTV cap on business gold loans. The tiers are scoped to consumption. An income-generating gold loan has no RBI ceiling — it is the lender's board policy. Anyone quoting you “75% because RBI says so” on a business loan is wrong.
• No margin call. The LTV must hold on an ongoing basis throughout the tenor, but RBI prescribes no top-up demand and no auction trigger. What happens if gold falls is your lender's policy, not a rule. (Tellingly, loans against shares do carry an express seven-working-day cure window. The omission for gold is deliberate.)
• No tax deduction. A gold loan for consumption earns nothing. Used for a house or a business, the interest may be deductible on end-use — the gold is irrelevant to that.

Draw the maximum and you have zero headroom

This falls out of the arithmetic and is worth sitting with. If you draw the full permissible amount on a bullet loan, then at maturity your repayable equals exactly the LTV ceiling × your gold's value. Any fall in the gold price puts you in breach immediately — on day one, not eventually. Borrow below the maximum and the headroom is the gap you left.

If gold falls

RBI does require adequate notice before auction, advertisement in two newspapers (one regional, one national), a reserve price of at least 90% of current value (85% after two failed auctions), and the first auction in the same district as the lending branch. The lender may not bid. Surplus must be refunded within 7 working days, and your gold released within 7 working days of repayment — with ₹5,000/day compensation for lender-caused delay.

Source: RBI (Commercial Banks — Credit Facilities) Directions, 2025, para 44–45 · NBFC equivalent id=12957 para 43–44 · verified July 2026. The standalone Lending Against Gold and Silver Collateral Directions, 2025 were withdrawn on 28 Nov 2025 and folded into these.