RBI’s new rules will change the business model of gold loans

S&P Global Ratings has said that the Reserve Bank of India’s (RBI) new rules for lending against gold pledge will change the way companies do business. Now, a maximum of 80% of the value of gold can be given as a loan for loans between Rs 2.5 lakh and Rs 5 lakh, while this limit has been reduced to 75% for loans above Rs 5 lakh. Companies have time till April 1, 2026, to implement these rules. S&P believes that despite this change, competition among companies will remain on the speed of work and providing good service to customers. S&P analyst Geeta Chugh said that such financial companies should not rely only on the price of gold. They will also have to check the income of the person to whom the loan is being given and whether he will be able to repay the loan. For this, companies will have to hire new employees and train them, which will require both money and hard work. Experts said that gold prices fell below $3,390 per ounce due to the strength in the US dollar after the Federal Reserve decided to keep interest rates unchanged at 4.25-4.50 percent. Gold fluctuated due to the market reaction to the US Federal Reserve’s policy stance, which indicated that there would be no immediate interest rate cut. Despite the Federal Reserve’s aggressive stance, the ongoing geopolitical tensions between Iran and Israel provide protection for gold.

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