Reserve Bank of India (Lending Against Gold and Silver Collateral)

 

RBI Updates Rules on Lending Against Gold and Silver (September 29, 2025)

The Reserve Bank of India (RBI) has issued its first amendment to the Lending Against Gold and Silver Collateral Directions, 2025. These updates are designed to bring more clarity and discipline to how banks and financial institutions handle loans secured by gold and silver.

Key Highlights:

  1. No Loans for Buying Gold as Investment

    • Banks and lenders are prohibited from granting loans for the purchase of gold in any form—whether raw gold, ornaments, jewellery, coins, or even financial products like Gold ETFs and Mutual Funds backed by gold.

  2. Restrictions on Lending Against Gold & Silver

    • Advances cannot be given against primary gold or silver or financial assets linked to them.

  3. Exception for Industrial Use

    • Scheduled Commercial Banks and Tier 3 & 4 Urban Cooperative Banks (UCBs) may provide need-based working capital loans to businesses that use gold or silver as raw material in manufacturing or industrial processing.

    • However, these loans must not be used to stockpile gold/silver for investment or speculation.

  4. Reference to Earlier Circulars

    • The amendment also incorporates earlier RBI circulars (2012–2013) that restricted bank finance for gold purchases, reaffirming the regulator’s long-standing stance on discouraging speculative demand for gold.

  5. Effective Date

    • The new rules come into force immediately for new adopters, while for institutions that have already adopted the original directions, the amendment is effective from October 1, 2025.

Why This Matters

  • RBI aims to curb excessive demand for gold as an investment, which often fuels imports and affects India’s current account balance.

  • By allowing lending only for productive industrial purposes, the focus shifts from speculation to supporting genuine business needs.

  • This move balances the role of gold in India’s economy while safeguarding financial stability.

Comments

Post a Comment

Popular posts from this blog

Give comparison of all the charges of top 10 Payment Gateways in India

  Comparison of Charges of Top 10 Payment Gateways in India (2025) As the digital payment landscape continues to grow in India, selecting the right payment gateway is essential for businesses aiming to streamline online transactions. While functionality, integration, and customer support are important, charges and fees often remain the deciding factor. This article offers an in-depth comparison of charges associated with the top 10 payment gateways in India to help merchants make an informed choice. 🧾 Key Payment Gateway Charges Explained Before diving into the comparison, let’s understand the common fee structures: Charge Type Description Setup Fee One-time fee charged during account creation. Annual Maintenance Fee Yearly charge for using the service. Transaction Discount Rate (TDR) Fee deducted per transaction, usually a percentage of the transaction amount. Payout/Withdrawal Fee Charges for transferring money from the gateway to the bank account. 📊 Top 10 Payment Gatew...
Read more

What are the detailed steps to start a Digital Gold Business?

What are the Detailed Steps to Start a Digital Gold Business? In the evolving landscape of fintech and digital assets, digital gold has emerged as a popular investment tool. It allows customers to buy, sell, and store gold digitally without physically owning it. Starting a digital gold business is a lucrative venture, but it requires strategic planning, regulatory compliance, and strong technological infrastructure. Here’s a step-by-step guide to help you understand how to start a digital gold business: Step 1: Understand the Digital Gold Business Model Before diving in, gain a solid understanding of the digital gold ecosystem. In this model: Customers buy and sell gold in small or large quantities online. The gold is backed by physical gold stored securely by trusted vaulting partners. You act as a platform that facilitates these transactions and may earn via spreads, commissions, or service fees. There are typically three key players in this model: Customer – t...
Read more

How does economic data of USA affect the gold prices?

  How Does Economic Data of the USA Affect Gold Prices? Gold has long been considered a safe-haven asset—an investment that retains or increases in value during times of market turbulence or economic uncertainty. While a wide array of factors influence gold prices globally, economic data emerging from the United States often exerts the most significant impact. As the world’s largest economy and the issuer of the global reserve currency, the U.S. plays a central role in shaping global financial markets. This article delves deep into how various U.S. economic indicators affect gold prices, exploring the intricate interplay between data, investor sentiment, and market dynamics. The Dollar-Gold Relationship: A Foundational Principle Before exploring individual data points, it's essential to understand the inverse correlation between the U.S. dollar and gold prices. Gold is priced globally in U.S. dollars. When the dollar strengthens, gold becomes more expensive in other currencies,...
Read more