Summary of this article
Amendments consolidate scattered gold metal loan rules.
Framework improves clarity for banks and jewellers.
New system strengthens supervision and risk management.
The Reserve Bank of India (RBI), through a press release on December 4, 2025, has made amendments to the existing rules for the gold metal loan framework to bring all previous instructions under one place, close regulatory gaps, and give banks clearer guidance. These changes followed a draft released on September 29, 2025, inviting public comments. After considering the feedback from different stakeholders, the final directions have now been notified to commercial banks and small finance banks.
Why The Amendments Were Issued
Gold metal loans enable banks to lend physical gold to domestic and export jewellers, rather than providing cash. Such loans have vast use in the jewellery industry, and are used for reducing working capital costs and supporting operations linked to imports and manufacturing. Over time, several rules were issued in parts, which made compliance difficult. The new amendment directions are intended to consolidate all regulations, iron out inconsistencies, and create a simpler structure.
The draft rules released earlier were designed to achieve four major objectives. The first was to bring all instructions related to gold metal loans under one set of directions. The second was to fill gaps in prudential norms, especially around lending practices and risk management. The third was to expand the scope of the scheme through more flexibility for different types of transactions. The fourth was to allow banks more operational freedom while framing their internal policies for the product.
What Has Changed In The Final Directions
Based on the feedback received on the draft, amendment directions have been issued by the central bank. These would be applicable to commercial banks and small finance banks. The changes would ensure uniformity for all jewellers, who may operate either in the domestic market or focus on exports. Amendments have also been made to help banks standardise how they assess the value of gold metal loan proposals and record the related information.
The development of a supervisory management information system for gold metal loans is one of the salient features of the revised rules, which will enable the regulator to track the volume, usage and risk profile of those loans more effectively. This will also contribute to closer monitoring of the sector, which has been growing steadily due to strong demand for gold and jewellery over the last few years.
The amendments stress the need for a harmonious approach between different categories of banks. All lenders, in this way, follow the same broad framework but keep the flexibility for designing their own operating policies. These rules reduce variations in interpretations; therefore, compliance, it is hoped, is much clearer to both the jeweller and the bank.
Impact On Banks And Jewellers
The revised framework is likely to bring greater clarity to banks that extend gold metal loans. A more structured rulebook will help banks manage credit risk, fix loan terms, and process applications with fewer ambiguities. For jewellers, uniform norms lessen confusion and make the borrowing process easier to comprehend.
The motive is, therefore, mainly regulatory clarity since the amendments focus on consolidation rather than introducing new incentives. This framework is expected to ensure further stability and good supervision of gold metal lending through the strengthening of prudential norms. The move will help in creating a data trail that can support future policy decisions.
What Can Be Anticipated
With the final directions, banks will have to revise their internal policies and systems to conform to the changed framework. Jewellers using the facility of gold metal loans will operate with banks under the revised rules once such arrangements are operationalised.
These guidelines conclude the review process that started with the draft in September. According to the central bank, inputs from stakeholders have been assessed and incorporated, addressing concerns raised during the consultation process.
