What changed
The maximum gold loan tenor increased from 240 days (60 days manufacture/export + 180 days price fixing/repayment) to 270 days (90 days manufacture/export + 180 days price fixing/repayment) as per the Foreign Trade Policy 2009-14. The Standby Letter of Credit (SBLC) tenor for gold imports on loan basis must now align with this revised 270-day period.
What it means for you
Banks must update their gold loan product terms and SBLC issuance guidelines to reflect the new 270-day maximum tenor. This change provides exporters more time for manufacturing and export (90 days instead of 60) while keeping the price fixing and repayment window unchanged at 180 days. All other conditions from the 2005 circular remain in force.
What you must do
- Update internal gold loan policies to set maximum tenor at 270 days (90 days manufacture/export + 180 days price fixing/repayment).
- Ensure SBLC tenors for gold imports on loan basis are aligned with the new 270-day loan period.
- Communicate the revised tenor to all constituents and customers dealing with gold loans.
- Monitor compliance with FTP 2009-14 and any future government updates on gold loan tenors.
Who it affects
Category-I Authorised Dealer Banks, Gold importers and exporters using loan basis imports, Customers availing gold loans for export purposes
What is the new maximum tenor for gold loans under this circular?
The maximum tenor is now 270 days, comprising 90 days for manufacture and export plus 180 days for price fixing and repayment, as per the Foreign Trade Policy 2009-14.
Does this circular change the SBLC tenor requirement?
Yes, the SBLC tenor for gold imports on loan basis must now match the revised gold loan tenor of 270 days, wherever required.
Are any other terms from the 2005 circular affected?
No, all other terms and conditions from the A.P. (DIR Series) Circular No. 34 dated February 18, 2005 remain unchanged.