RBI Issues Amendments to Gold Metal Loan Framework Under Credit Facilities Directions, 2025
The Reserve Bank of India (RBI) has introduced significant amendments to the Commercial Banks – Credit Facilities Directions, 2025, particularly concerning the regulatory framework for Gold Metal Loans (GML). Issued under the powers conferred by Sections 21 and 35A of the Banking Regulation Act, 1949, these amendments aim to strengthen oversight, streamline operational processes, and ensure greater transparency and prudence in credit dispensation involving gold.
Gold Metal Loans serve as a specialised credit product enabling qualified borrowers—such as jewellery manufacturers, exporters, and entities operating within the gold value chain—to access gold metal instead of cash. Given gold’s unique characteristics as a high-value commodity and the systemic relevance of such lending, RBI periodically reviews the GML norms to ensure strong risk controls and alignment with evolving industry practices. The 2025 amendments reflect this continuing endeavour, incorporating learnings from market developments and stakeholder feedback.
Under the revised framework, the RBI has enhanced clarity on eligibility, permissible end-use, and documentation standards for GML transactions. Banks are expected to maintain robust due-diligence processes, ensuring that borrowers with access to imported or domestic refined gold utilise the metal strictly for the stated commercial purposes. The amendments emphasise stricter adherence to inventory monitoring, valuation norms, and repayment structures—areas crucial for mitigating risks arising from gold price volatility.
Another key feature of the amendments is the reinforcement of prudential safeguards. Banks must maintain improved internal controls over gold imports undertaken on a consignment basis and closely track the conversion of gold metal into finished jewellery or other products. The Directions underscore the need for periodic stock audits, authenticated reporting by borrowers, and real-time reconciliation between physical stock and book records.
These changes also align GML accounting, collateral management, and risk-weighting practices with broader credit-risk management frameworks applied across commercial banks. The Directions encourage banks to adopt technology-enabled monitoring systems and strengthen compliance to prevent misuse or diversion of gold metal financed through the banking system.
By refining operational standards and mandating higher transparency, the RBI aims to promote a safer and more resilient gold-lending ecosystem. The amendments are expected to contribute to responsible credit expansion within the gold sector while safeguarding financial stability.
The updated Directions take immediate effect, and all commercial banks engaging in Gold Metal Loans are required to align their policies and procedures with the revised regulatory expectations.
