The Reserve Bank of India (RBI) has introduced new banking directions effective from October 1, 2025, encompassing amended interest rate rules for advances, broader lending criteria against gold and silver collateral, and revised capital regulations.

Key changes allow banks to reduce spread components on floating rate loans before three years and discretionarily offer fixed-rate switch options during resets.

Loans against gold and silver were previously restricted to jewellers but are now extended to manufacturers using these metals and Tier 3 and 4 Urban Co-operative Banks. The RBI has also proposed draft guidelines on gold metal loans repayment terms, large exposures, and credit reporting, inviting public feedback by October 20.

Flexible Interest Rate Adjustments and Borrower Benefits

The amended Reserve Bank of India (Interest Rate on Advances) Directions, 2025, revise norms for floating rate retail and MSME loans linked to external benchmarks, enabling lenders to reduce spread components earlier than the previous three-year limit, thus potentially lowering EMIs for borrowers sooner than before.

Moreover, banks now have discretion on whether to provide the option to switch to fixed-rate loans at reset, offering flexibility to customers. According to the RBI, these changes aim to benefit borrowers while giving banks managing liberty, enhancing refinancing options and responsiveness to policy rate shifts.

Broadened Lending Horizons Against Gold and Silver Collateral

Previously, only jewelry shop owners could get loans by keeping their gold/silver as security with banks. Now, factories that make products using gold/silver can also get such loans. Even smaller cooperative banks in smaller cities can now give these loans.

The RBI’s Lending Against Gold and Silver Collateral – 1st Amendment Directions, 2025, extend eligibility for gold and silver-backed loans beyond jewellers to manufacturers and industrial users of these metals. Tier 3 and Tier 4 Urban Co-operative Banks can now grant such loans, expanding credit access for small and medium enterprises while controlling risk prudently.

The central bank maintains prohibitions on loans for the purchase or speculative holding of gold or silver, focusing on productive use. Draft guidelines also propose extending repayment ceilings for jewellers to 270 days and allowing non-manufacturers outsourcing jewellery production to avail Gold Metal Loans.

The Logical Indian’s Perspective

RBI’s updated directives mark progressive steps toward flexible, inclusive banking that empowers borrowers and small enterprises dependent on gold and silver assets.

Expanding credit through diverse channels while safeguarding against speculative risks embodies responsible regulation. The Logical Indian champions such reforms that balance borrower welfare with systemic stability.