RBI Revamps Gold Metal Loan Directions for Banks

Press Release: 2025-2026/1628; Dated: 04.12.2025

1. Introduction

The Reserve Bank of India (RBI) has issued revised Gold Metal Loan (GML) Directions, marking a significant update to the regulatory framework governing gold-related lending activities in the banking sector. The move aims to streamline processes, remove inconsistencies, and promote uniform practices across banks offering gold metal loans to manufacturers, exporters, and jewellery businesses.

2. Objectives Behind the Revamp

The revamped Directions are intended to simplify compliance requirements, enhance operational clarity, and reduce ambiguity associated with earlier guidelines. With the growing relevance of GMLs in supporting the jewellery and export sectors, RBI’s revision seeks to ensure that lending practices are better aligned with current market realities, risk management standards, and evolving industry needs.

3. Key Changes Introduced in the Updated Framework

The new Directions provide clearer definitions, harmonised procedures, and improved monitoring mechanisms for GML operations. RBI has standardised eligibility norms, collateral rules, repayment structures, and end-use guidelines to ensure consistency across the banking system. Additionally, the updated norms emphasise stronger risk assessment, transparent pricing practices, and better reporting to prevent misuse or mismanagement of gold-backed credit facilities.

4. Impact on Banks and Borrowers

Banks will benefit from a more structured and uniform regulatory framework, enabling smoother implementation and reduced compliance-related confusion. For borrowers — including jewellery manufacturers, exporters, and bullion users — the revamp is expected to result in clearer terms, improved loan accessibility, and more predictable lending processes. The revised norms also enhance transparency, strengthening trust between banks and gold-sector borrowers.

5. Conclusion

RBI’s revamp of the Gold Metal Loan Directions represents a proactive step toward modernising gold-lending regulations and supporting a key segment of India’s economy. By streamlining guidelines and promoting uniform practices, the central bank aims to strengthen risk management while facilitating growth for businesses reliant on gold as working capital. The updated framework positions the sector for smoother, more compliant, and more efficient lending operations in the years ahead.

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