What changed
New definitions for Gold Metal Loans, including GMS‑linked and import‑linked variants, have been inserted. The existing Chapter V on GML is removed and replaced by Chapter V(A) that outlines eligibility, risk‑management and valuation rules. Banks must now formalise policies on loan limits, borrower eligibility and monitoring.
What it means for you
Small Finance Banks must update their lending manuals to incorporate the new GML categories and limits. All GML exposures will be treated like any other loan for capital adequacy, with daily valuation based on LBMA gold price and the USD/INR rate. Ongoing monitoring of gold usage and exposure levels is now mandatory.
What you must do
- Revise the GML lending and risk‑management policy to include the new definitions, borrower categories and quantitative limits.
- Implement a system to value GML daily using LBMA gold price and the prevailing USD‑INR exchange rate.
- Ensure GML exposures meet standard capital adequacy and prudential norms.
- Set up continuous monitoring of exposure size and end‑use of gold for each borrower.
- Align eligibility checks with the revised criteria for GMS‑linked and import‑linked GML.
Who it affects
Small Finance Banks, Designated banks under the Gold Monetization Scheme, Nominated banks authorized to import gold, Jewellery manufacturers and sellers, MMTC Limited (for minting India Gold Coins)
What is a GMS‑linked Gold Metal Loan?
It is a loan of physical gold extended by banks participating in the Gold Monetization Scheme, using gold deposited under the scheme or borrowed from other GMS banks, with repayment possible in gold, cash, or a mix of both.
How must banks value a Gold Metal Loan?
Banks must convert the lent gold quantity to Indian rupees each day using the LBMA gold price in USD and the current USD‑INR exchange rate.
Who can obtain an import‑linked Gold Metal Loan?
Jewellery manufacturers or sellers, including those outsourcing production, can borrow from banks authorized to import gold, provided repayment is made in cash.