Balancing between Bling & Business: RBI proposes new Gold Lending Rules
Team Finserv (finserv@vinodkothari.com)
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Balancing between Bling & Business: RBI proposes new Gold Lending rules
– Team Finserv | finserv@vinodkothari.com
Genesis of the change
The RBI on September 30, 2024, flagged several concerns in gold lending practices of financial entities. Further, there were separate guidelines for banks and NBFCs leading to regulatory arbitrage and operational ambiguity. On April 09, 2025, the RBI introduced the Reserve Bank of India (Lending Against Gold Collateral) Directions, 2025 (Draft Directions).
The Draft Directions intend to:
- Harmonise guidelines w.r.t. gold lending across all REs.
- Address previous observations raised by RBI in lending practices and plug any loopholes.
In this write-up, we highlight the major changes for lenders, and particularly for NBFCs (The same are subsequently elaborated in the article).
Read more →Surging gold loan business sets off RBI alarm
Several practices in gold lending pointed by supervisor; 3 months’ time to mend ways
– Team Finserv (finserv@vinodkothari.com)
The Reserve Bank of India (‘RBI’) issued a notification dated September 30, 2024[1] raising concerns on the irregular practices observed in the grant of loans against pledge of gold ornaments and jewellery.
The RBI’s comprehensive review has unveiled notable deficiencies, including lapses in due diligence process, credit appraisals, ineffective monitoring of loan-to-value (LTV) ratios, a lack of transparency in the auctioning of jewellery upon default and so on. This notification compels all commercial banks, primary co-operative banks, and non-banking financial companies to undertake a meticulous evaluation of their existing gold lending processes and rectify identified gaps or shortcomings.
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