RBI Overhauls Gold Metal Loan (GML) Framework: Dual Categories, Gold Repayment Flexibility for Jewellers & MMTC

The changes, which were notified through official releases on the RBI website, issues Amendments to Gold Metal Loan (GML) Scheme press release and also incorporates the amended directions for commercial and small banks.

Also Read:RBI Issues 238 Consolidated Master Directions: 9,000+ Circulars & Guidelines Reorganised [Read Circular]

The amendments are set to take effect from April 1, 2026, with banks permitted to implement the amendments in entirety from an earlier date.

What the Amendments Introduce

RBI replaces the old Chapter V with a new Chapter V(A) - Gold Metal Loans (GML) to formally create two GML categories:

1. GMS-linked GML (gold mobilised under the Gold Monetisation Scheme, 2015) and;
2. Import-linked GML (gold imported by nominated banks)

The amendment also addresses existing prudential gaps and provides banks with greater operational flexibility, while simultaneously strengthening risk management requirements.

These measures are intended to streamline gold-based credit for both domestic and export jewellers and to establish a unified supervisory MIS framework for monitoring Gold Metal Loans.

Eligible banks and borrowers

Nominated/import-authorised banks may extend import-linked gold metal loans to jewellers.

Designated banks operating under the GMS may extend GMS-linked GML to jewellers and to MMTC Ltd. for minting India Gold Coins (IGC). Jewellers that are not manufacturers may borrow only to outsource manufacturing on a job-work basis. Banks must frame GML lending and risk policies which cover borrower eligibility, permissible tenor, end-use restrictions, repayment terms and exposure limits per borrower, along with detailed risk-management and monitoring procedures.

Also Read:RBI Revises FEMA Rules on Carrying Indian Currency to and from Nepal, Bhutan, Pakistan & Bangladesh [Read Circular]

Repayment methods

A key practical shift comes in the form of the borrowers being able to repay the GMS-linked GML in gold, in cash, or a combination of both, provided that the gold is as per the standards of GDS (India Good Delivery Standard) / LGDS (LBMA’s Good Delivery Standards); that the delivery is conducted by the refiners or approved central agencies; borrowers must be informed upfront of implications.

However, Import-linked GML must be repaid only in cash.

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Repayment (principal and interest) is calculated in INR by marking the gold quantity to the London Bullion Market Association (LBMA) Gold AM price crossed with the INR-USD reference rate.

For all GML other than lending to jewellery exporters, a bank may fix a repayment tenor as per its policy, in alignment with the working capital cycle of the jeweller, subject to a ceiling of 270 days.

Also Read:RBI New Credit Reporting Rules require Weekly CIBIL Updates: Faster Loan Sanctions & EMI Payment Confirmations

Prudential safeguards & disclosures

Banks must ensure that gold lent is not sold or exported as primary gold and shall put in place ongoing end-use monitoring to ensure the same. Lending to non-regular customers is allowed if backed by an INR-denominated stand-by letter of credit (SBLC) or bank guarantee (BG) from another scheduled bank, with independent credit assessments and adequate margins.

The RBI maintains that the amendments will highly improve ease of doing business for jewellers, strengthen supervisory oversight and reduce regulatory arbitrage between domestically mobilised and imported gold.

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