Vinu: 

Manu: Yes, Vinu. The Reserve Bank of India (RBI) has issued final norms after public consultation, and they’ve eased some of the draft guidelines. One of the major changes is that lenders must now maintain an 85% Loan-to-Value (LTV) ratio for consumption-related gold loans below ₹2.5 lakh, instead of the earlier proposed 75%.

Vinu: That’s interesting. What about loans above ₹2.5 lakh?

Manu: Good question. For loans between ₹2.5 lakh and ₹5 lakh, the LTV ratio has been fixed at 80%. For loans above ₹5 lakh, the LTV remains at 75%, which was the original cap.

Vinu: So are these LTV ratios fixed for the entire duration of the loan?

Manu: Yes, RBI clarified that the prescribed LTV ratio must be maintained on an ongoing basis throughout the loan's tenure.

Vinu: And what if a borrower wants to take a top-up loan or renew an existing one?

Manu: That’s allowed too, provided it’s formally requested by the borrower and goes through proper credit assessment. The loan must stay within the permissible LTV and be classified as a standard asset. Also, any renewal of bullet repayment loans is only allowed after accrued interest is paid. All such renewals and top-ups must be clearly tracked in the Core Banking System or Loan Processing System.

Vinu: I read something about borrower ownership. Can a loan be issued if collateral ownership is unclear?

Manu: No. RBI clearly stated that loans must not be extended if the ownership of the gold collateral is doubtful. Lenders must obtain a suitable document or declaration from the borrower confirming ownership.

Vinu: Manu, before we wrap up, can you explain a few technical terms we discussed?

Manu: 

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