Key Points
- No loans to buy gold (primary gold, jewellery, coins) or gold-backed financial assets (ETFs/MFs).
- Working-capital finance allowed to businesses that use gold/silver as raw material or process input.
- Permitted lenders: Scheduled Commercial Banks and Tier-3/Tier-4 Urban Co-operative Banks.
- Lenders must ensure no investment/speculative holding of gold by borrowers.
- Annex cites past circulars (Nov 19 & Dec 5, 2012) for consistency and compliance mapping.
The Reserve Bank of India (RBI) has issued the 1st Amendment to its “Lending Against Gold and Silver Collateral” Directions, 2025,
clarifying that while banks cannot extend loans for the purchase of gold in any form or for gold-backed financial assets,
they may provide need-based working capital to eligible borrowers who use gold or silver as raw material in their manufacturing
or industrial processes. The amendment follows market feedback and aims to align credit availability with genuine business use-cases while
ring-fencing speculative demand.
What Changed
- Explicit prohibition on advances for purchasing primary gold, ornaments, jewellery, coins, or units of gold ETFs/Mutual Funds.
- Permission granted for working-capital loans against gold/silver collateral to firms that consume these metals as inputs.
- Lenders must obtain an undertaking/controls that the borrower will not hold gold for investment/speculation.
Who Can Lend & Who Can Borrow
| Lenders | Eligible Borrowers | Purpose |
|---|---|---|
| Scheduled Commercial Banks; Tier-3/Tier-4 UCBs | Entities using gold/silver as raw material or industrial input (incl. outsourced processing) | Need-based working capital; gold/silver may be taken as security |
Not Allowed
- Financing the purchase of gold (primary/jewellery/coins) or gold-backed ETFs/MFs.
- Holding or acquiring gold for investment/speculation under the guise of working-capital needs.
Why It Matters
- Supports real-economy users of precious metals (manufacturers/processors) with clearer access to bank credit.
- Contains speculative leverage in gold by drawing a hard line between productive use and investment demand.
- Regulatory clarity helps banks standardize policies and reduce compliance ambiguity across branches.
This news report summarizes key elements visible in the RBI document image “(Lending Against Gold and Silver Collateral) – 1st Amendment Directions, 2025”.
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