RBI Amends Rules on Gold & Silver Lending, Collateral and Basel III; Eases Loan Facilities for Banks and Businesses [Read Amendments]

The amendments were announced by the central bank through Press Release: 2025-2026/1197 dated September 29, 2025.

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The RBI has highlighted that the amendments are aimed at improving borrower flexibility, increasing stakeholders’ access to working capital loans and providing banks with more avenues to raise capital. RBI has also deployed draft frameworks to receive feedback to harmonize regulations on gold-based lending and to enhance transparency in credit reporting.

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Key Amendments Effective October 1, 2025

Interest Rate on Advances

Under the Reserve Bank ofIndia (Interest Rate on Advances) (Amendment Directions), 2025, banks may reduce spread components of floating interest rates earlier than the current three-year limit, providing quicker relief to borrowers in a scenario where interest rates are declining. Additionally, banks may offer borrowers the option to switch from floating to fixed rates at the time of reset of interest rates as per the Circular onReset of Floating Interest Rate on EMI based Personal Loans dated August 18,2023.

Lending Against Gold and Silver Collateral

Through the RBI (LendingAgainst Gold and Silver Collateral) – (1st Amendment) Directions, 2025, Scheduled Commercial Banks (SCBs) are now permitted to extend working capital loans not only to jewellers but also to businesses that use gold as a raw material. Tier 3 and Tier 4 Urban Co-operative Banks have also been allowed to grant such loans.

Basel III Capital Regulations

The RBI (Basel IIICapital Regulations – Perpetual Debt Instruments in Additional Tier 1 Capital)Directions, 2025 revise the eligible limit for Perpetual Debt Instruments (PDI) denominated in foreign currency or rupee bonds overseas, giving Scheduled Commercial Banks excluding Regional Rural Banks, greater flexibility to raise Additional Tier 1 capital via offshore markets.

The RBI has also released four draft frameworks to receive feedback from stakeholders. The proposals made by RBI have been formulated to further liberalise gold-based financing, refine prudential norms on large exposures and intragroup dealings and improve the timeliness and accuracy of credit reporting.

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Following are the Draft Proposals Open for Consultation:

Gold Metal Loans (GML)

The draft RBI (Gold MetalLoans) Directions, 2025 propose extending repayment tenors for jewellers from 180 to 270 days and allowing non-manufacturers to avail GML for outsourced jewellery production.

Large Exposures Framework and Intragroup Transactions

Draft amendments to the Large ExposuresFramework (Amendment Circular), 2025 and the Guidelines onIntragroup Transactions and Exposures (Amendment Circular), 2025 clarify prudential treatment of exposures of foreign bank branches in India to their head offices and group entities.

The two Amendment Circulars amend the extant norms to clarify certain aspects on prudential treatment of exposures of foreign banks operating as branches in India and align some of the prudential norms under the Large Exposures Framework (LEF) and Intragroup Transactions and Exposures (ITE) guidelines.

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Credit Information Reporting

The draft RBI (Credit Information Reporting) (1st Amendment) Directions, 2025 propose that credit institutions report borrower data weekly, instead of fortnightly, to Credit Information Companies (CICs). It also mandates capturing Central Know Your Customer (CKYC) numbers in consumer reporting formats for improved accuracy.

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Closing and Outcome

The RBI has invited comments on these draft proposals from banks, market participants, and other stakeholders until October 20, 2025. Responses may be submitted through the “Connect 2Regulate” portal or by email to the Department of Regulation.

The latest amendments introduced by the Reserve Bank are expected to ease loan facilities for businesses, provide borrowers with more interest rate options, and strengthen capital-raising opportunities for banks; additionally the process of inviting public feedback will help the central bank to formulate regulations apt to the concerns that are raised by the industry stakeholders.

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