**Summary:**
This circular, RBI/2021-22/58 DOR.CREDIR.REC.2423/67.001/2021-22, issued by the Reserve Bank of India (RBI) on June 23, 2021, addresses the repayment of Gold Metal Loans (GML) by Scheduled Commercial Banks (excluding Regional Rural Banks). It refers to previous instructions on GML issued through circulars DBOD.No.IBS.1519/23.67.001/98-99 dated December 31, 1998, DBOD.No.IBS.316/23.67.001/98-99 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 dated April 2, 2014.
The circular permits banks to provide borrowers with the option to repay a portion of their GML in physical gold, in lots of one kg or more, subject to specific conditions. These conditions include: (a) the GML must be sourced from locally sourced Gold Monetization Scheme (GMS)-linked gold; (b) repayment must be made using locally sourced India Good Delivery Standard (IGDS)/London Bullion Market Association’s (LBMA) Good Delivery Standards gold; (c) gold must be delivered directly to the bank by the refiner or a central agency acceptable to the bank, without borrower involvement; (d) the loan agreement must detail the borrower's option, acceptable standards, and delivery methods for gold repayment; and (e) the borrower must be informed upfront about the implications of exercising this option.
The circular also directs banks to incorporate these aspects into their board-approved policies governing GML, along with appropriate risk management measures, and to continue monitoring the end-use of funds lent under GML. All other existing instructions on GML remain unchanged.
The circular was issued by Manoranjan Mishra, Chief General Manager, Department of Regulation, Central Office Building, Shahid Bhagat Singh Marg, Mumbai – 400001. The contact numbers are 22661602 and 22601000, and the fax numbers are 022-2270 5670, 2260 5671, 2270 5691 and 2260 5692.
Key Entities Referenced
Scheduled Commercial Banks: Refers to all commercial banks in India that are listed in the Second Schedule to the Reserve Bank of India Act, 1934.
Regional Rural Banks: Refers to rural banks in India with a mandate to provide credit and other facilities to small farmers, agricultural laborers, and artisans.
Gold Metal Loans: Loans provided by nominated banks authorized to import gold and designated banks participating in Gold Monetization Scheme, 2015 to jewellery exporters or domestic manufacturers of gold jewellery.
Gold Monetization Scheme, 2015: A scheme by Government of India to mobilize gold held by households and institutions of the country and facilitate its use for productive purposes.
INR: Indian Rupee, the official currency of India.
IGDS India Good Delivery Standard: A standard for gold delivery in India.
LBMA's Good Delivery Standards: Gold delivery standards set by the London Bullion Market Association.
Mumbai, Maharashtra: Location of Central Office Building, Department of Regulation.
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:
a. the GML has been extended out of locally sourced / GMS-linked gold;
b. repayment is made using locally sourced IGDS (India Good Delivery Standard)/
LGDS (LBMA’s Good Delivery Standards) gold;
c. 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;
d. the loan agreement contains details of the option to be exercised by the
borrower, acceptable standards and manner of delivery of gold for repayment;
e. the borrower is apprised upfront, in a transparent manner, of the implications
of exercising the option.
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िविनयमन िवभाग, क��ीय कायार्लय, 12व� और 13व� मंिज़ल, क��ीय कायार्लय भवन, शहीद भगत �संह माग,र् मुंबई 400001
टेलीफोन /Tel No: 22661602, 22601000फैक्स/Fax No: 022-2270 5670, 2260 5671, 5691 2270, 2260 5692
Department of Regulation, CO, 12th & 13th Floor, Central Office Building, Shahid Bhagat Singh Marg, Mumbai - 400001
Tel No: 22661602, 22601000 F ax No : 022-2270 5670, 2260 5671, 5691 2270, 2260 5692
ब�क �हदं ी म� प�ाचार का स्वागत करता ह ै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