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Gold Loan Cap: Co-op Banks Must Limit Coin Weight to 50g

Current · Source: Reserve Bank of India · RBI/2012-13/522 · issued 06 Jun 2013 · ~2 min read
Quick answerRBI directs state/central co-operative banks to ensure gold coin collateral per customer does not exceed 50 grams. Loans against gold ornaments and jewellery remain allowed within board-approved limits. This prevents circumventing gold bullion lending rules.
The rule, in the simplest words
How it plays out — a real example

A gold-loan officer in a rural co-operative bank in Maharashtra receives a customer who wants a loan against a 100-gram gold coin. The officer politely explains that the new RBI rule limits coin collateral to 50 grams per customer, so she cannot accept the coin. Instead, she suggests the customer bring gold jewellery or a smaller coin, and updates the loan policy to ensure all staff follow the cap.

What changed

RBI now mandates that state/central co-operative banks must ensure gold coins accepted as collateral per customer weigh up to 50 grams. Previously, there was no explicit weight cap on gold coins. The move aligns with the Monetary Policy Statement 2013-14 to close a loophole where heavy coins were used to bypass restrictions on lending against gold bullion.

What it means for you

Co-operative banks must update their gold loan policies to enforce a 50-gram per customer limit on gold coin collateral. Loans against gold ornaments and jewellery are unaffected but must stay within board-approved limits. This reduces risk of disguised bullion lending and ensures compliance with RBI's broader gold loan framework.

What you must do

Who it affects

State co-operative banks, Central co-operative banks, Gold loan customers of co-operative banks, Bank loan officers handling gold collateral

❓ Common questions

Does this apply to loans against gold ornaments and jewellery?

No, the 50-gram limit applies only to gold coins. Loans against gold ornaments and jewellery remain permitted, subject to board-approved limits.

What happens if a customer already has a gold coin loan above 50 grams?

The source does not address existing loans; it only applies to new advances. Banks should ensure future compliance.

Can we lend against gold coins weighing exactly 50 grams?

Yes, coins weighing up to 50 grams per customer are allowed. Ensure the weight is verified and documented.

📜 Read the original circular — full text as issued by RBI
RBI/2012-13/522 RPCD.CO.RCB.BC.No. 77 /07.51.014/2012-13 June 06, 2013 The CEOs of all State and Central Co-operative Banks Dear Sir, Lending against gold Please refer to paragraph 98 of the Monetary Policy Statement 2013-14 announced on May 3, 2013 ( extract enclosed ) on lending against gold, proposing to restrict the facility of advances against the security of gold coins per customer to gold coins weighing up to 50 grams. 2. State/Central co-operative banks are currently permitted to grant advances against gold ornaments and jewellery. Under gold loans, some banks may have granted advances against specially minted gold coins sold by banks. As pointed out in the monetary policy statement, while granting advance against the security of specially minted gold coins sold by banks, state/central co-operative banks should ensure that the weight of the coin(s) does not exceed 50 grams per customer and the amount of loan to any customer against gold ornaments, gold jewellery and gold coins (weighing up to 50 grams) should be within the Board approved limit. Yours faithfully, (A. Udgata) Principal Chief General Manager Encl. as above Extract of Monetary Policy Statement 2013-14 98. As per extant instructions, banks are currently permitted to grant advances against gold ornaments and other jewellery and against specially minted gold coins sold by banks. However, no advances can be granted by banks for purchase of gold in any form, including primary gold, gold bullion, gold jewellery, gold coins, units of gold exchange traded funds and units of gold mutual funds. While there may not be any objection to grant of advances against specially minted gold coins sold by banks, there is a risk that some of these coins would be weighing much more, thereby circumventing the Reserve Bank’s guidelines regarding restrictions on grant of advance against gold bullion. Accordingly, it is proposed to: restrict the facility of advances against the security of gold coins per customer to gold coins weighing up to 50 gms.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/522 · issued 06 Jun 2013. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
🏦 Branch Manager
  • Communicate the new restriction to branches and customers immediately.
💰 Credit
  • Update gold loan policy to cap gold coin collateral at 50 grams per customer.
📜 Compliance
  • Train loan officers to verify coin weight and reject any coin exceeding 50 grams.
  • Ensure all gold loans (ornaments, jewellery, coins) adhere to board-approved limits.
  • Review existing gold coin loan portfolio and adjust any exposures above 50 grams.
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 Credit Manager at a bank this circular applies to (State co-operative banks, Central co-operative banks, Gold loan customers of co-operative banks, Bank loan officers handling gold collateral), your first concrete step on “Gold Loan Cap: Co-op Banks Must Limit Coin Weight to 50g” is: “Update gold loan policy to cap gold coin collateral at 50 grams per customer.” (RBI issued this 06 Jun 2013).

  1. Circular: RBI/2012-13/522 -- Gold Loan Cap: Co-op Banks Must Limit Coin Weight to 50g
  2. Issued: 06 Jun 2013
  3. Action required: Update gold loan policy to cap gold coin collateral at 50 grams per customer.
  4. Action required: Train loan officers to verify coin weight and reject any coin exceeding 50 grams.
  5. Action required: Ensure all gold loans (ornaments, jewellery, coins) adhere to board-approved limits.
  6. Action required: Review existing gold coin loan portfolio and adjust any exposures above 50 grams.
  7. Action required: Communicate the new restriction to branches and customers immediately.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. 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.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8022&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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