Home › Circulars › RBI/2005-06/196

RBI advises banks to consider hallmarked gold jewellery for advances

No longer current — replaced by RBI/2019-20/81 DCBR.BPD.(PCB/RCB).Cir.No.04/07.01.000/2019

Source: Reserve Bank of India · RBI/2005-06/196 · issued 02 Nov 2005 · ~1 min read

Quick answerRBI advises banks to consider hallmarked gold jewellery as safer collateral for advances, encouraging lower margins and flexible rates. This aims to boost hallmarking adoption, benefiting lenders, consumers, and the industry. Existing loan conditions remain unchanged.

What changed

RBI issued a circular on November 2, 2005, urging banks to recognize the advantages of hallmarked gold jewellery when granting advances. It suggests banks may offer preferential margins and interest rates for such collateral. No other conditions for gold loans were altered.

What it means for you

Banks can now treat hallmarked jewellery as more reliable collateral, potentially reducing risk and allowing more competitive loan terms. This could increase demand for hallmarking, improving quality assurance in the gold market. Lenders should update internal policies to reflect this preference without changing existing gold loan frameworks.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Review and update gold loan policies to explicitly favor hallmarked jewellery with lower margins or better rates.
Train loan officers to verify hallmarking certificates and assess purity before sanctioning advances.
Communicate this preferential treatment to customers to encourage hallmarking adoption.
Ensure all other existing conditions for gold loans remain compliant with RBI guidelines.

Who it affects

All scheduled commercial banks (excluding RRBs)

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-06-19 19:37 IST
Superseded by — RBI/2019-20/81 DCBR.BPD.(PCB/RCB).Cir.No.04/07.01.000/2019
Status change: superseded 09 Jul 2026, 04:04 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Does this circular mandate lower margins for hallmarked jewellery?

No, it only advises banks to consider the advantages of hallmarked jewellery and decide on margins and rates accordingly. It is a recommendation, not a mandate.

Are non-hallmarked jewellery loans still allowed?

Yes, the circular does not prohibit loans against non-hallmarked jewellery. It simply encourages preferential treatment for hallmarked items.

Does this replace earlier gold loan guidelines?

No, it references the earlier circular from November 22, 1994, and states other conditions remain unchanged.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Superseded by RBI/2019-20/81 DCBR.BPD.(PCB/RCB).Cir.No.04/07.01.000/2019

📜 Read the original circular — full text as issued by RBI

RBI/2005-06/196
 DBOD.No.IBD.BC. 663 /23.67.001/2005-06 
 November 2, 2005 

 The Chairmen and CEOs of all Scheduled Commercial Banks
 (Excluding RRBs) 

 Dear Sir 

 Advances against Gold Ornaments and Jewellery 

 Please refer to our circular DBOD. No. BP.BC. 138/21.01.023/94 dated November 22, 1994 on the captioned subject as also earlier circulars enclosed for ready reference. 

 2. As you are aware, hallmarking of gold jewellery ensures the quality of gold used in the jewellery as to caratage, fineness and purity. Therefore, banks would find granting of advances against the security of such hallmarked jewellery safer and easier. Preferential treatment of hallmarked jewellery is likely to encourage practice of hallmarking which will be in the long-term interest of consumer, lenders and the industry. 

 3. Therefore, banks while considering granting advances against jewellery may keep in view the advantages of hallmarked jewellery and decide on the margin and rates of interest thereon. 

 4. Other conditions in respect of grant of advances against gold ornaments and jewellery remain unchanged. 

 Yours faithfully 

 ( P. Saran )
 Chief General Manager

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2005-06/196 · issued 02 Nov 2005. The plain-English explanation above is BankPulse’s own independent summary.

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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2553&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.