From gold loans to EMIs: RBI’s fresh rules every borrower must know from Oct 1

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The Reserve Bank of India (RBI) has issued new directions to banks, effective from October 1, 2025, covering interest rate on advances, lending against gold and silver collateral, and capital regulations. Along with these, the central bank has also released draft guidelines for public comments on gold metal loans, large exposures, intragroup transactions, and credit information reporting.

In an official statement on Monday, the RBI stated, "RBI has today issued seven Directions/Circulars, proposing to amend some of the extant Directions/Circulars applicable to banks and other regulated entities".

The guidelines stated that under the Reserve Bank of India (Interest Rate on Advances) (Amendment Directions), 2025, rules for floating rate loans have been revised.

New rules for floating rate loans

At present, floating rate retail and MSME loans are linked to an external benchmark (like repo rate), with banks allowed to set a spread. Except for credit risk premium, these spreads could be changed only once in three years.

Now, RBI has given banks more flexibility:

• Spreads can be reduced earlier than three years to benefit borrowers.
• Banks may offer the option to switch to fixed rates at the time of EMI reset — but this is no longer mandatory, only at the bank’s discretion.

RBI has also widened the scope of loans backed by precious metals. Until now, lending against gold and silver was mostly permitted for jewellers.

From October:

• Borrowers using gold as raw material in manufacturing or industrial processing can also avail such loans.
• Tier 3 and Tier 4 Urban Co-operative Banks have been allowed to provide these loans, bringing more players into the market.

The RBI has notified fresh directions on perpetual debt instruments in Additional Tier 1 Capital, continuing the framework for scheduled commercial banks (excluding regional rural banks). This ensures financial stability while giving banks flexibility in raising capital.

Draft guidelines for public feedback

Along with the mandatory directions, RBI has also floated four draft guidelines for feedback (comments open till October 20, 2025):

• Gold Metal Loans (GML): Repayment period for jewellers extended from 180 days to 270 days; eligibility widened to domestic non-manufacturers outsourcing jewellery.
• Large Exposures Framework (LEF) & Intragroup Transactions (ITE): Clarifies rules for foreign banks’ India branches, extends credit risk mitigation benefits, and links ITE threshold to Tier-1 capital.
• Credit Information Reporting: Data submission to credit bureaus may soon shift from fortnightly to weekly, with quicker error rectification and inclusion of CKYC numbers.