Banks will now be able to extend gold metal loans (GML) to a wider category of jewellers — including those who do not manufacture jewellery themselves — under the final guidelines issued by the Reserve Bank of India (RBI) on Thursday. The norms take effect from April 1, 2026.
Who becomes eligible for GML under the expanded framework?
The updated provisions, part of amendments to the Master Direction on Import of Goods and Services and the Gold Monetisation Scheme (GMS), allow nominated banks importing gold to extend import-linked GML to entities engaged in manufacturing or selling jewellery in domestic or export markets. Jewellers who do not manufacture themselves may also borrow, provided they outsource production on a job-work basis to registered artisans, goldsmiths or manufacturing firms.
The RBI stated: “Nominated banks importing gold… may extend import-linked GML to entities who either manufacture and/or sell jewellery… Provided that, jewellers who are not manufacturers themselves, may borrow under GML only for outsourcing their manufacturing.”
What changes apply to GMS-linked gold metal loans?
The RBI has permitted designated banks implementing the GMS to provide GMS-linked GML not only to jewellers but also to MMTC specifically for minting India Gold Coins (IGCs).
What risk and lending policies must banks follow?
Banks must frame a lending and risk management policy prescribing the categories of GML to be undertaken, limits on the quantity of gold per borrower, and the total outstanding quantity allowed. The policy should include detailed due-diligence requirements to determine borrower eligibility and credit needs. GML exposures will be subject to capital adequacy and other prudential norms like any other loan.
How will GML be valued and monitored?
GML will continue to be treated like any other loan for prudential purposes and must be valued daily based on the LBMA Gold AM price crossed with the rupee–dollar reference rate. To ensure end-use discipline, banks must monitor that GML-sourced gold is not sold or exported in primary form.
Banks may accept INR-denominated standby letters of credit (SBLCs) or bank guarantees issued by other scheduled commercial banks, subject to independent credit assessment and adequate margins against gold price volatility. Interest rates may be freely determined based on the cost of procuring and holding gold.
What are the repayment rules under the new norms?
For jewellery exporters, loan tenors will align with the Foreign Trade Policy. For other borrowers, banks may set repayment periods based on working-capital cycles, capped at 270 days. Repayments — including principal and interest — must be made in rupees, although borrowers of GMS-linked GML may opt to repay principal partly or fully in physical gold under strict sourcing and delivery conditions.
The RBI added that small finance banks must follow the same guidelines for gold metal loan schemes.
 "RBI widens gold metal loan access for more jewellers under 2026 norms")
