However, regulated entities (REs) are permitted to extend loans against collateral in the form of gold jewellery, ornaments, and coins to meet the short-term financing needs of borrowers. The RBI noted that prudential and conduct-related regulations for such loans have been issued over time for various types of REs.
While the RBI’s core regulatory philosophy remains consistent across entities, the rules differ in some respects due to variations in institutional mandates and risk-taking capabilities.
The existing regulations are intended to provide borrowers with access to liquidity by leveraging idle gold jewellery, ornaments, or coins, while also managing the associated risks for lenders. Similar concerns have shaped past regulations related to lending against silver collateral.
As part of efforts to transition to a more principle-based and harmonised regulatory framework — and to address potential prudential and conduct-related gaps across REs — the RBI has issued consolidated Directions on Lending Against Gold and Silver Collateral.
The regulatory objectives of these directions are to establish a uniform framework for such loans across REs, address concerns arising from certain lending practices, provide clarity on key aspects, and strengthen conduct-related standards.
First Published: Jun 6, 2025 9:40 PM IST
