RBI Lending Against Gold and Silver Directions 2025 – Amendment

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  • Last Updated on 3 October, 2025

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RBI Lending Against Gold and Silver Directions 2025

Circular No. DOR.CRE.REC.52/21.01.023/2025-26, Dated: 29.09.2025

1. Introduction

The Reserve Bank of India (RBI) has notified the Reserve Bank of India (Lending Against Gold and Silver Collateral) (1st Amendment) Directions, 2025. This amendment introduces specific relaxations while retaining the broader restrictions on lending against gold and silver. The changes reflect RBI’s intent to strike a balance between preventing speculative use of precious metals and supporting genuine business requirements.

2. Restriction on Investment-Linked Financing

As per the amendment, lenders continue to be barred from financing the purchase of gold or silver or extending credit against such metals for investment purposes. This safeguard ensures that lending practices do not fuel speculative demand or volatility in the gold and silver markets, aligning with RBI’s longstanding prudential approach to lending against bullion.

3. Relaxation for Need-Based Working Capital

At the same time, the amendment provides greater flexibility to certain regulated entities. Specifically, Scheduled Commercial Banks and Tier 3 or Tier 4 Urban Co-operative Banks (UCBs) are now permitted to extend need-based working capital finance to borrowers. This is allowed only when gold or silver is used as a raw material for manufacturing or processing, ensuring that the credit supports productive economic activity rather than investment-driven demand.

4. Safeguards for Responsible Lending

RBI has emphasised that these relaxations must operate under strict safeguards and internal controls. Lenders are expected to conduct due diligence, verify the end-use of funds, and ensure compliance with board-approved policies before extending finance. By mandating robust oversight, the RBI seeks to balance flexibility for manufacturers with the overarching goal of financial stability and responsible lending practices.

5. Conclusion

The 2025 amendment to the lending directions on gold and silver reaffirms RBI’s cautious yet supportive approach to bullion-linked finance. While speculative lending remains prohibited, the allowance for need-based working capital against gold and silver used in manufacturing will benefit industries dependent on these metals. This measured relaxation ensures that credit is channelled into productive sectors of the economy, while preserving systemic stability and preventing misuse of lending channels.

Click Here To Read The Full Circular

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied