The RBI on Friday raised the loan-to-value (LTV) ratio for lending against gold to 85 per cent for borrowings under Rs 2.5 lakh from the present 75 per cent, and spelt out other conditions with an aim to regulate the category in a better way with minimum risk.
The LTV ratio has been fixed at 80 per cent for loan amounts between Rs 2.5 lakh and Rs 5 lakh and 75 per cent for loans above Rs 5 lakh, said the Reserve Bank of India (Lending Against Gold and Silver Collateral) Directions, 2025.
LTV ratio on a day means the ratio of the outstanding loan amount to the value of the pledged eligible collateral as on that day. In case of bullet repayment loans, however, the LTV calculation shall take into account the total amount repayable at maturity.
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