Gold Metal Loans: Partial Repayment in Physical Gold Allowed
No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2021-22/58 · issued 23 Jun 2021 · ~2 min read
Quick answerRBI now permits borrowers to repay part of Gold Metal Loans in physical gold (min 1 kg lots) if the loan was sourced from locally procured or GMS-linked gold. Banks must update board-approved policies and ensure transparent borrower disclosure.
What changed
Previously, Gold Metal Loans (GML) could only be repaid in INR equivalent to the gold value. Now, banks must offer borrowers the option to repay a portion of the loan in physical gold, provided the gold is locally sourced or from the Gold Monetization Scheme, meets IGDS/LGDS standards, and is delivered directly by the refiner or a central agency without borrower involvement.
What it means for you
This gives jewellery exporters and domestic manufacturers more flexibility in managing gold inventory and cash flows. Banks need to update their GML policies, incorporate risk management measures, and ensure transparent communication with borrowers about the implications of repaying in gold.
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 your board-approved Gold Metal Loan policy to include the option for partial repayment in physical gold, specifying minimum lot size (1 kg), acceptable gold standards, and delivery procedures.
Ensure loan agreements clearly detail the repayment option, acceptable gold standards, and the manner of delivery, and inform borrowers upfront about all implications.
Implement risk management measures for accepting physical gold as repayment, including valuation, storage, and purity verification processes.
Continue monitoring end-use of funds lent under GML as per existing instructions.
Who it affects
Scheduled Commercial Banks (excluding RRBs) extending Gold Metal Loans, Jewellery exporters and domestic manufacturers of gold jewellery, Nominated banks authorized to import gold, Designated banks participating in Gold Monetization Scheme, 2015
❓ Common questions
Regulatory timeline
Decoded by BankPulse2026-06-18 07:54 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Can borrowers repay the entire GML in physical gold?
No, only partial repayment is allowed, and that too in lots of one kg or more. The option applies only to loans extended from locally sourced or GMS-linked gold.
What gold standards are acceptable for repayment?
The gold must meet India Good Delivery Standard (IGDS) or LBMA Good Delivery Standards (LGDS). It must be delivered directly by the refiner or a central agency acceptable to the bank, without the borrower handling the gold.
Do we need to change our existing loan agreements?
Yes, loan agreements must now include details of the repayment option, acceptable gold standards, and delivery procedures. Borrowers must be informed upfront about the implications of choosing this option.
📜 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)
📜 Read the original circular — full text as issued by RBI
RBI/2021-22/58
DOR.CRE(DIR).REC.24/23.67.001/2021-22
June 23, 2021
All Scheduled Commercial Banks
(excluding Regional Rural Banks)
Madam / Dear Sir,
Gold (Metal) Loans – Repayment
Please refer to instructions issued vide circulars DBOD.No.IBS.1519/23.67.001/98-99 dated December 31, 1998 , DBOD.No.IBS.3161/23.67.001/98-99 dated June 25, 1999 , DBOD.No.IBD.BC.33/23.67.001/2005-06 dated September 5, 2005 , DBOD.No.IBD.BC.71/23.67.001/2006-07 dated April 3, 2007 and DBOD.No.IBD.BC.104/23.67.001/2013-14 April 2, 2014 on the captioned subject.
2. As per the extant instructions, nominated banks authorized to import gold and designated banks participating in Gold Monetization Scheme, 2015 (GMS) can extend Gold (Metal) Loans (GML) to jewellery exporters or domestic manufacturers of gold jewellery. These loans are repaid in INR, equivalent to the value of gold borrowed, on the relevant date/s.
3. On a review, it has been decided as under:
i) Banks shall provide an option to the borrower to repay a part of the GML in physical gold in lots of one kg or more, provided:
the GML has been extended out of locally sourced / GMS-linked gold;
repayment is made using locally sourced IGDS (India Good Delivery Standard)/ LGDS (LBMA’s Good Delivery Standards) gold;
gold is delivered on behalf of the borrower to the bank directly by the refiner or a central agency, acceptable to the bank, without the borrower’s involvement;
the loan agreement contains details of the option to be exercised by the borrower, acceptable standards and manner of delivery of gold for repayment;
the borrower is apprised upfront, in a transparent manner, of the implications of exercising the option.
ii) Banks shall suitably incorporate the above aspects into the board-approved policy governing GML along with concomitant risk management measures. Banks shall continue to monitor the end-use of funds lent under GML.
4. All other instructions issued on GML shall remain unchanged.
Yours faithfully,
(Manoranjan Mishra)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2021-22/58 · issued 23 Jun 2021. The plain-English explanation above is BankPulse’s own independent summary.
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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=12117&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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