Gold price fall triggers margin calls on bullet loans

The article says a sharp decline in gold prices over the past five months has triggered margin calls on some gold loans, especially bullet-repayment loans where borrowers do not reduce principal through monthly EMIs. Local gold prices are down about 22% from the late-January peak, easing from ₹1.82 lakh to around ₹1.40 lakh per 10 grams in India. The fall has increased loan-to-value ratios on pledged gold and pressured lenders to ask for additional collateral or partial repayment. EMI-based loans are less exposed because principal declines over time, creating a cushion. The piece also notes that RBI’s new gold-loan framework, effective April 1, caps LTV ratios and is pushing non-bank lenders toward EMI products, which should reduce future margin-call risk. Lenders interviewed said the situation remains manageable and that most already operate below regulatory LTV ceilings.