What changed
RBI now caps advances against specially minted gold coins at 50 grams per customer, closing a loophole where larger coins could bypass bullion lending restrictions. It also clarifies that loans against units of gold ETFs and gold mutual funds are prohibited, as these are backed by bullion.
What it means for you
Banks must enforce a 50-gram per-customer limit on gold coin loans and treat gold ETF and gold mutual fund units as bullion, meaning no advances against them. This tightens gold lending norms to prevent circumvention of the existing bullion ban, impacting loan portfolios and customer offerings.
What you must do
- Update loan policies to cap gold coin advances at 50 grams per customer.
- Stop accepting gold ETF and gold mutual fund units as collateral for loans.
- Ensure board-approved limits cover all gold loans (ornaments, jewellery, coins up to 50g).
- Review existing gold loan accounts to identify and rectify any non-compliant exposures.
Who it affects
All scheduled commercial banks (excluding RRBs), Gold loan customers, Bank treasury and credit departments
Does this circular affect loans against gold ornaments?
No, loans against gold ornaments and jewellery remain permitted under board-approved policies, as per the 1994 circular. Only gold coins and bullion-linked products are restricted.
Can we still lend against gold coins if the customer has multiple coins?
Yes, but the total weight of all coins per customer must not exceed 50 grams. Any combination of coins is allowed as long as the aggregate weight stays within this limit.
Are gold ETFs and gold mutual funds now completely banned as collateral?
Yes, because they are backed by bullion or primary gold, the 1978 ban on advances against gold bullion applies to them. Banks cannot accept these units as security for loans.