What was announced?
The Reserve Bank of India (RBI) released a draft framework titled "Reserve Bank of India (Lending Against Gold Collateral) Directions, 2025". This framework aims to establish a comprehensive set of guidelines for loans secured by gold collateral, harmonizing regulations across various Regulated Entities (REs).
When?
The draft was issued in April 2025 and is currently open for public comments.
Applicability
The draft directions apply to all Regulated Entities (REs), including:
- Commercial Banks (including Regional Rural Banks and Local Area Banks)
- Urban/State/Central
- Co-operative Banks
- All India Financial Institutions (AIFIs)
- Non-Banking Financial Companies (NBFCs), including Housing Finance Companies (HFCs)
Impact on Banks
- Unified Framework: Establishes a harmonized regulatory framework for lending against gold collateral across all REs.
- Loan-to-Value (LTV) Ratio: Specifies LTV ratios to ensure prudent lending practices.
- Valuation and Assaying: Standardizes procedures for the valuation and assaying of gold collateral to ensure consistency and transparency.
- Collateral Management: Provides guidelines on the handling, storage, and release of gold collateral, including procedures for unclaimed gold.
- Conduct-Related Aspects: Emphasizes fair practices, transparency in auction procedures, and compensation mechanisms.
- Regulatory Reporting: Mandates updated disclosure norms for transparency and regulatory compliance.
All regulatory changes arising from this announcement will be addressed as part of the OneSumX Regulatory Update Services (RUS). Learn how to be prepared for upcoming regulatory changes by visiting OneSumX for Regulatory Reporting.