Understanding Indian Gold Loan Policies: What Every Girvi Business Must Know
In India, gold has always held more than just sentimental value—it's a powerful financial asset. Millions of people turn to gold loans when they need quick access to funds. Whether you're a jeweler offering Girvi services or a licensed money lender, staying updated with Indian policies related to gold loans is critical to ensure compliance and protect your business.
In this blog, we break down the key policies, RBI guidelines, and legal considerations every Girvi or gold loan business in India must understand.
A gold loan is a secured loan where borrowers pledge gold jewelry or coins as collateral to receive funds. It's popular due to fast disbursal, minimal documentation, and flexible repayment options. Girvi businesses—traditional pawn brokers or jewelers—also operate similarly by accepting gold items in exchange for loans.
The Reserve Bank of India (RBI) regulates all Non-Banking Financial Companies (NBFCs) and banks offering gold loans. Some of the important RBI guidelines include:
Loan-to-Value (LTV) Ratio:
RBI mandates a maximum of 75% LTV—which means lenders can offer loans up to 75% of the gold's current market value.
KYC Compliance:
Lenders must collect Know Your Customer (KYC) documents like Aadhaar, PAN, and photographs before approving a loan.
Tenure of Loan:
Gold loans typically range from 3 to 12 months, but can be extended if necessary.
Auction Rules:
If the borrower defaults, lenders must follow RBI's auction guidelines. A 30-day public notice is required before auctioning pledged gold.
Interest Rates & Transparency:
All interest rates and processing charges must be clearly disclosed and documented.
Girvi or pawn businesses not registered as NBFCs must follow state-specific Money Lending Acts. Some key compliance requirements include:
Money Lending License from your state's authority.
Stamped pledge receipts for all transactions.
Proper recordkeeping of pledges, interest charged, repayment history, etc.
Annual interest rate limits vary by state (e.g., Rajasthan, Gujarat, Maharashtra).
Failure to follow these norms may lead to penalties or legal action.
Manual Girvi recordkeeping may lead to non-compliance, interest miscalculations, and lost documents. A digital system like Girvi Management Software helps you:
Stay legally compliant
Auto-calculate interest
Generate receipts and reports
Track auctions and loan closures
Maintain audit-ready records
Gold loan businesses in India must walk a fine line between tradition and regulation. Staying updated with RBI policies, ensuring KYC, and maintaining clean records is not just smart—it’s essential. If you're still relying on notebooks and guesswork, it’s time to go digital and run your Girvi business the right way.
Start your free trial with Girvi Management Software today. Stay secure. Stay compliant.