Correction in gold price likely to make 90% LTV risky for borrowers

Those in dire financial straits may find it difficult to pay the margin demanded by lenders

Keeping the impact of the Covid-19 pandemic on households in mind, the Reserve Bank of India (RBI) on Thursday allowed borrowers to take a higher amount as loan against gold, by increasing the permissible loan-to-value (LTV) ratio on gold loans for non-agricultural purposes from 75 per cent to 90 per cent.

If you have gold worth Rs 1 lakh, you can now get Rs 90,000 as loan, instead of the earlier limit of Rs 75,000. This relaxation will be in effect till March 31, 2021. Says Padmaja Chunduru, managing director and chief executive officer (CEO), Indian Bank: “This will help