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Informist, Wednesday, Apr. 9, 2025

MUMBAI – To harmonise regulations around loans against gold jewellery for all regulated entities and to address the concerns observed around them, the Reserve Bank of India has decided to review and issue comprehensive guidelines on lending against gold. The draft norms will be issued for public comments on Wednesday. 

"In order to harmonise guidelines across various types of regulated entities, to the extent possible, keeping in view their differential riskbearing capabilities, we shall issue comprehensive regulations on prudential norms and conduct related aspects for such loans," RBI Governor Sanjay Malhotra said while announcing the outcome of the Monetary Policy Committee's meeting Wednesday.

Gold loans have emerged as the fastest category in the deployment of bank credit, according to latest data released by the Reserve Bank of India. At INR 1.91 trillion, banks' credit outstanding against gold jewellery on Feb. 21 marked a massive 87.4% on-year jump. A year ago, the rise was much lower at 15.2%.

Post the announcement, shares of major non-banking finance companies offering gold loans slumped. 

However, at a post-policy press conference, Malhotra said he had never said that the norms would be tightened for regulated entities. After the clarification, shares of gold financiers came off lows. At 1330 IST, shares of Muthoot Finance were at INR 2,161.65, down 5.7%, slightly off lows after hitting the 10% lower circuit earlier. IIFL Finance was down 3% after declining over 5%. Shares of Manappuram Finance were down nearly 2%.

"It is a rationalisation, it's broadly an extension on the conduct side primarily. What were the guidelines for NBFCs, those have been extended now to the banking sector also," Malhotra said. He reiterated that these were draft guidelines and were subject to consultation and then finalisation.  End

Reported by Kshipra Petkar

Edited by Avishek Dutta

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