NBFCs Banned from Financing Gold Purchases in Any Form
Current · Source: Reserve Bank of India · RBI/2012-13/510 · issued 27 May 2013 · ~2 min read
Quick answerRBI has prohibited NBFCs from granting advances for purchase of gold in any form—primary gold, bullion, jewellery, coins, ETFs, or gold mutual funds—extending a 2012 ban on loans against bullion.
The rule, in the simplest words
NBFCs (Non-Banking Financial Companies) cannot give loans for buying gold in any form.
This includes gold jewellery, ETFs (Exchange Traded Funds), and gold mutual funds.
NBFCs must stop giving new loans for gold purchases and review their existing loan products.
How it plays out — a real example
Rahul, a forex & trade-finance officer in Indore, received a circular from RBI stating that NBFCs are no longer allowed to give loans for gold purchases. He immediately stopped giving new loans for gold and reviewed the existing loan products to ensure that no indirect financing for gold purchases was being extended. He also updated the internal policies and credit appraisal systems to align with the new prohibition.
What changed
Earlier, NBFCs were barred from lending against bullion, primary gold, and gold coins. This circular expands the prohibition to cover all advances for purchasing gold in any form, including jewellery, ETFs, and gold mutual funds.
What it means for you
NBFCs must immediately stop all gold purchase financing, which could reduce their gold-linked loan portfolios and impact customer segments reliant on such credit. Lenders need to review existing gold loan products to ensure no indirect financing for gold purchases occurs.
What you must do
Cease all new advances for purchase of gold in any form, including jewellery, ETFs, and mutual funds.
Review existing loan products to ensure no indirect financing for gold purchases is being extended.
Update internal policies and credit appraisal systems to align with the expanded prohibition.
Communicate the change to branches and loan officers to prevent inadvertent violations.
Who it affects
All Non-Banking Financial Companies (NBFCs), NBFC customers seeking gold purchase loans, Gold jewellery retailers and gold ETF distributors relying on NBFC financing
❓ Common questions
Does this circular apply to loans against gold already owned by the borrower?
No, this circular specifically prohibits advances for the purchase of gold. Loans against gold already owned (e.g., gold loan against jewellery) are not covered by this ban, but NBFCs must ensure the funds are not used for buying more gold.
Are gold ETFs and gold mutual funds included in the prohibition?
Yes, the circular explicitly includes units of gold Exchange Traded Funds (ETFs) and units of gold Mutual Funds in the list of prohibited forms of gold for which advances cannot be granted.
What was the previous guideline on this matter?
The earlier guideline dated March 21, 2012 (circular DNBS.CC.PD.No.265/03.10.001/2011-12) only barred advances against bullion, primary gold, and gold coins. This circular expands the ban to all forms of gold purchase financing.
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/510
DNBS.CC.PD.No.326/03.10.01/2012-13
May 27, 2013
To
All NBFCs
Dear Sir,
NBFCs finance for Purchase of Gold
In terms of extant guidelines issued vide circular DNBS.CC.PD.No.265/03.10.001/2011-12 dated March 21, 2012 no advances should be granted by NBFCs against bullion / primary gold and gold coins.
2. It is clarified that no advances should be granted by NBFCs for purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold Exchange Traded Funds (ETF) and units of gold Mutual Funds.
Yours faithfully
(N. S. Vishwanathan)
Principal Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/510 · issued 27 May 2013. The plain-English explanation above is BankPulse’s own independent summary.
Communicate the change to branches and loan officers to prevent inadvertent violations.
💰 Credit
Update internal policies and credit appraisal systems to align with the expanded prohibition.
📜 Compliance
Cease all new advances for purchase of gold in any form, including jewellery, ETFs, and mutual funds.
Review existing loan products to ensure no indirect financing for gold purchases is being extended.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (All Non-Banking Financial Companies (NBFCs), NBFC customers seeking gold purchase loans, Gold jewellery retailers and gold ETF distributors relying on NBFC financing), your first concrete step on “NBFCs Banned from Financing Gold Purchases in Any Form” is: “Cease all new advances for purchase of gold in any form, including jewellery, ETFs, and mutual funds.” (RBI issued this 27 May 2013).
Circular: RBI/2012-13/510 -- NBFCs Banned from Financing Gold Purchases in Any Form
Issued: 27 May 2013
Action required: Cease all new advances for purchase of gold in any form, including jewellery, ETFs, and mutual funds.
Action required: Review existing loan products to ensure no indirect financing for gold purchases is being extended.
Action required: Update internal policies and credit appraisal systems to align with the expanded prohibition.
Action required: Communicate the change to branches and loan officers to prevent inadvertent violations.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 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=7998&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.
Help us keep this accurate
Found an inaccuracy or have an improvement? Tell us. Every report is reviewed by our team before any change is made — nothing goes live unverified.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
BANKPULSE · FREE DAILY BRIEF
Get RBI updates for your role
Every important RBI update, decoded in plain English — for your career, exams & financial awareness.
We collect only your email, name and role, used solely to send your brief — never sold or shared. Withdraw anytime via the unsubscribe link in any email. Independent platform, not affiliated with the RBI. Information, not legal advice.
REPORT AN ERROR · BETA
Spotted an error? Earn 500 BankPulse Credits
Help us stay accurate. If your correction is verified true and approved by our founder, you earn 500 BankPulse Credits — redeemable when the platform monetises.
Reviewed by a human before any credit is awarded. We never change the site from crowd input without verification.
WANT A NEW FEATURE · BETA
What would make BankPulse more useful for you?
Tell us what to build next — a tool, a data view, a role page, anything. We read every suggestion.
Thank you — your ideas directly shape what we build.