RBI Eases Gold-Backed Loans for Manufacturers
The Reserve Bank of India has permitted banks to issue working capital loans to manufacturers using gold as a raw material. This policy, enacted through the RBI's 2025 amendment, extends a provision historically exclusive to jewellers, aiming to bolster manufacturing and provide financial flexibility.
- Country:
- India
The Reserve Bank of India (RBI) has broadened financial scopes by allowing banks to sanction need-based working capital loans to manufacturers who incorporate gold as a crucial raw material in their operations.
This represents an extension of a provision that was previously available only to jewellers. By issuing the Reserve Bank of India (Lending Against Gold and Silver Collateral) (1st Amendment) Directions, 2025, the RBI now enables scheduled commercial banks to address any need-based working capital requirements for entities using gold in their industrial processing activities.
This directive is part of a move to enhance financial flexibility and bolster the manufacturing sector by also adjusting rules around interest rates and foreign capital accessibility, effective from October 1, 2025.
(With inputs from agencies.)
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