RBI Eases Loan Norms, Gold Lending Rules & Capital Regulations from October 1

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The Reserve Bank of India (RBI) has announced a set of regulatory changes, effective October 1, 2025, covering
interest rates on advances, lending against gold and silver collateral, and capital regulations.
Additionally, draft guidelines have been released for public consultation on gold metal loans,
large exposures, intragroup transactions, and credit information reporting.

Interest Rate on Advances: Relief for Borrowers

Under the Interest Rate on Advances (Amendment Directions), 2025, banks can now reduce spread components
on floating-rate retail and MSME loans earlier than the existing three-year limit.

Borrowers may benefit from faster transmission of rate cuts, potentially reducing EMIs and interest payments.
Moreover, banks now have the discretion (not obligation) to offer a switchover to fixed-rate loans during reset.

Gold and Silver Lending: Wider Access

The Lending Against Gold and Silver Collateral – 1st Amendment Directions, 2025 now extend loans not only
to jewellers but also to manufacturers using gold as raw material.

Tier 3 and Tier 4 Urban Co-operative Banks have also been permitted to lend against gold and silver,
aligning them with scheduled commercial banks.

Capital Regulations: Offshore Fundraising Eased

The Basel III Capital Regulations (PDIs in AT1 Capital – Eligible Limit) continue to allow banks greater
flexibility to raise Tier-1 capital through foreign currency or rupee-denominated bonds overseas,
strengthening their capital base.

Draft Guidelines Open for Public Feedback

The RBI has also issued draft circulars open for comments until October 20, 2025. These include:

• Gold Metal Loans (GML): Repayment ceiling extended to 270 days (from 180), allowing access to
  non-manufacturing jewellers outsourcing production.
• Large Exposures & Intragroup Transactions: Aligns prudential treatment of foreign bank branches’
  exposures to head offices and links thresholds to Tier 1 capital.
• Credit Information Reporting: Requires weekly (instead of fortnightly) submission of credit data,
  faster error rectification, and mandatory CKYC number inclusion.

These measures are aimed at improving transparency, compliance, and customer benefit while reducing systemic risks.