On Apr. 9, IND RBI proposed rules re lending against gold collateral.
IND RBI issued Draft RBI (lending against gold collateral) directions, 2025.
Follows Apr. 2025, IND RBI statement on developmental, reg policies, #250395.
Background
Previously, IND RBI restricted lending against primary gold and gold bullions due to macro-prudential concerns and the speculative, non-productive nature of gold.
Regulated entities (REs) are permitted to lend against the collateral security of gold jewellery and ornaments to meet the short-term financing needs of borrowers.
Prudential and conduct-related regulations for such loans have evolved and have been issued separately for different REs based on their structures and risk capacities.
Amendments
To create harmonized and principle-based regulatory environment, IND RBI proposed comprehensive and revised directions on lending against gold collateral for all REs.
The main objectives are to establish a uniform regulatory framework for gold-backed loans across all REs, address issues in current lending practices and provide clarity on specific matters and enhance the conduct-related standards in lending.
Effectiveness
Comment period of the consultation closes on May 12, 2025.
