No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2006-2007/362 · issued 30 Apr 2007 · ~2 min read
Quick answerRBI reduced risk weight on gold/silver loans up to Rs 1 lakh from 125% to 50% for UCBs, effective immediately. This lowers capital requirements for small, secured retail loans, benefiting poorer borrowers.
What changed
RBI reduced the risk weight on loans up to Rs 1 lakh against gold and silver ornaments from 125% to 50% for all primary urban cooperative banks. This change was announced in the Annual Policy Statement for 2007-08 and took effect immediately from April 30, 2007.
What it means for you
UCBs now need to hold less capital for small gold loans, freeing up capital for other lending. This makes such loans more attractive for banks and more accessible for poorer borrowers, as the lower risk weight reflects the low risk of these secured advances.
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
Update internal risk-weighting models for gold/silver loans up to Rs 1 lakh to 50% immediately.
Review capital adequacy calculations to reflect the reduced risk weight for these loans.
Communicate the change to credit and risk management teams for consistent application.
Consider expanding small gold loan portfolios given the lower capital charge.
Who it affects
Primary Urban Cooperative Banks (UCBs), Borrowers availing small gold/silver loans up to Rs 1 lakh, Risk management and credit departments of UCBs, Note: The Annual Policy Statement proposed this for all categories of banks, but the circular is specifically for UCBs.
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-19 17:04 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn05 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Why did RBI reduce the risk weight on these loans?
RBI noted that loans against gold and silver ornaments up to Rs 1 lakh are low-risk due to adequate margins and easy marketability of collateral, and are commonly used by poorer sections. The reduction aligns capital requirements with actual risk.
Does this apply to all banks or only UCBs?
The circular is addressed to UCBs, but the Annual Policy Statement proposed this reduction for all categories of banks. UCBs must implement it immediately as per this notification.
What was the previous risk weight for these loans?
Previously, these loans attracted a risk weight of 125% as per circular UBD.PCB.Cir.33/09.116.00/04-05 dated January 5, 2005, which had increased it from 100%.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #2448: UBD(PCB).Cir.No.39/13.05.000/06-07 — "Annual Policy Statement for the Year 2007-08 - Loans Extended against Gold and Silver Ornaments - Reduction of Risk Weig”
📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/362
UBD (PCB).Cir.No.39 /13.05.000/06-07
April 30, 2007
The Chief Executives of
All Primary( Urban) Cooperative Banks
Dear Sir/Madam,
Annual Policy Statement for the Year 2007-08-
Loans Extended against Gold and Silver Ornaments-
Reduction of Risk Weight-UCBs
Please refer paragraph 151 of the Annual Policy Statement for the year 2007-08 . (Copy enclosed).
2. In terms of our circular UBD.PCB.Cir.33/09.116.00/04-05 dated January 5, 2005 , the risk weight on consumer credit including personal loan was increased from 100 % to 125 %z
3. It has been decided to reduce, with immediate effect, the risk weight on loans up to Rs.1 lakh against gold and silver ornaments to 50 per cent from the existing level of 125 per cent.
Yours faithfully,
(N.S.Vishwanathan)
Chief General Manager-in-Charge
Annual Policy Statement for the year 2007-08
151. Loans against gold and silver ornaments are commonly availed by the poorer sections of the society in both rural and urban areas. These loans entail relatively low risk as they are extended with adequate margins and the collateral (gold or silver) is easily marketable, particularly where the size of the loan is small. Such loans being in the nature of retail (personal) loans currently attract a risk weight of 125 per cent. It is now proposed:
• to reduce the risk weight on loans up to Rs.1 lakh against gold and silver ornaments to 50 per cent from the existing level of 125 per cent for all categories of banks
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/362 · issued 30 Apr 2007. 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=3470&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.
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