Big News for Jewelers! RBI Overhauls Gold Metal Loan Rules – Know All The Changes From 2026
Gold Metal Loans: In a significant reform for India’s gold sector, the Reserve Bank of India (RBI) has completely scrapped the old, fragmented regulations for Gold Metal Loans (GML) and introduced a new, simplified framework. This major overhaul, set to be effective from April 1, 2026, though banks can adopt it earlier, is poised to bring greater clarity and strength to the jewellery industry, directly impacting manufacturers, exporters, and the broader gold market.
New Gold Metal Loan Categories
The RBI has streamlined GMLs into two distinct categories, removing previous ambiguities. This clear classification will help both banks and borrowers understand the loan’s nature and terms more effectively.
- Import-Linked GML: These loans will be exclusively offered by banks that are authorised by the government or RBI to import gold. The gold provided under this loan will be sourced directly from the bank’s own imports.
- GMS-Linked GML: This category will utilise gold deposited with banks under the Gold Monetization Scheme (GMS). A key feature of this loan is the flexibility it offers in repayment—borrowers can repay the loan partially or fully in physical gold.
Who is Eligible for the New Loans?
The RBI has made it crystal clear that these loans are meant to support the country’s jewellery industry. The new rules specify the following eligible entities:
- Jewellery manufacturers, sellers, and exporters.
- Jewellers who do not manufacture themselves but get it done through job work are also eligible.
- In a first, the MMTC (Metals and Minerals Trading Corporation of India) has been approved to avail GML for manufacturing the official India Gold Coin.
A strict new rule prohibits the sale or export of gold taken under a GML in its raw form. This is to prevent misuse and potential price manipulation in the market.
Get Instant News Updates!
Join on TelegramStandardised Valuation and Repayment Rules
To bring uniformity, the RBI has mandated a new, standardised valuation method. Banks must now determine the daily value of the gold loan by combining the LBMA Gold AM Price and the official RBI dollar-rupee exchange rate. This ensures an accurate and consistent assessment of loan value and risk across all banks.
Repayment terms have also been revised and made more specific:
| Borrower Type | Repayment Tenure | Repayment Mode |
|---|---|---|
| Jewellery Exporters | As per Foreign Trade Policy | In Rupees for Import-Linked GML |
| Domestic Jewelers | Maximum 270 days | In Rupees for Import-Linked GML; Option for Gold repayment for GMS-Linked GML |
For GMS-linked loans, if repayment is made in gold, it must be of standard quality and delivered directly from a refiner or an authorised agency to the bank, ensuring complete transparency.
Increased Responsibility for Banks
The RBI has placed greater responsibility on banks to manage these loans. Banks are now required to:
- Formulate a comprehensive board-approved policy for Gold Metal Loans.
- This policy must define criteria for the loan amount, customer risk profile, and total lending exposure.
- Maintain meticulous daily records and closely monitor the end-use of the gold provided as a loan.
- Submit a detailed report to the RBI every three months, covering loan amounts, value, and distribution between domestic and export sectors.
This move from complex, scattered circulars to a single, master direction is aimed at simplifying business for the jewellery industry, reducing risks for banks, and creating a more organised and secure gold sector in India.
