The ratio of gross non-performing assets (NPAs) in gold loans for scheduled commercial banks and non-banking financial companies (NBFCs) has shown a rise over the last two years, the government informed Parliament on Monday.
Data shared by Minister of State for Finance Pankaj Chaudhary revealed that gold loan NPAs of banks moved up slightly from 0.20% in March 2023 to 0.22% in March 2025. For upper- and middle-layer NBFCs, the ratio climbed from 1.21% to 2.14% during the same period.
The minister, in a written reply to a question from Leader of the Opposition Rahul Gandhi, also stated that the RBI Ombudsman received 188 complaints related to gold loans in FY 2024&ndash;25. These were handled under the RBI Integrated Ombudsman Scheme, 2021.
To manage risks in gold loans, banks and NBFCs adopt several safeguards. These include regular checks of gold purity through acid tests, touchstone methods, and X-ray fluorescence (XRF) analysis; appointment of certified appraisers; and valuation of pledged gold under CCTV monitoring in the presence of both staff and borrowers.
Other protective steps involve periodic audits, strict compliance with RBI rules, and auction of pledged gold in case of defaults, with prior notice to borrowers to give them time to clear dues.
In addition, public sector banks have been asked to conduct a detailed review of gold loan portfolios disbursed between January 2022 and January 2024. This includes checking the accuracy of collateral assessment, gold assaying, and verifying interest and charges levied on borrowers.
The RBI has directed all regulated entities to regularly review their gold loan policies and practices, plug any gaps, and strengthen oversight of third-party service providers.
To further limit risks from gold price fluctuations or valuation errors, the RBI mandates that lenders cannot provide loans exceeding 75% of the value of pledged ornaments or jewellery. This Loan-to-Value (LTV) ratio of 75% must be maintained throughout the tenure.
For bullet repayment loans, where both interest and principal are payable at maturity, banks are restricted from sanctioning loans exceeding 12 months in tenure to reduce default risks. [Except for the headline, this article has not been edited by the Benefit News editorial team and is published directly from the IANS news feed]

Gold loan NPAs rise for NBFCs, stable for banks

NBFCs gold loan NPAs surge to 2.14%, banks record marginal rise to 0.22% in March 2025

Gold loan NPAs rise for NBFCs, stable for banks

NBFCs gold loan NPAs surge to 2.14%, banks record marginal rise to 0.22% in March 2025

August 18, 2025 | 18:10 IST