Mumbai: The Reserve Bank of India (RBI) has issued new directions to banks, effective October 1, 2025, covering interest rates on advances, lending against gold and silver collateral, and capital regulations.
In addition, the central bank has released draft guidelines for public feedback on gold metal loans, large exposures, intragroup transactions, and credit information reporting.
In an official statement on Monday, the RBI said, “RBI has today issued seven Directions/Circulars, proposing to amend some of the extant Directions/Circulars applicable to banks and other regulated entities.”
Under the RBI (Interest Rate on Advances) (Amendment Directions), 2025, rules for floating rate loans have been revised. Currently, floating rate retail and MSME loans are linked to an external benchmark, with banks allowed to set a spread, which could previously be changed only once in three years (except for the credit risk premium).
The new rules allow banks to reduce spread components earlier than three years to benefit borrowers. Additionally, offering an option to switch to a fixed rate during EMI reset in personal loans will now be at the bank’s discretion.
The RBI stated, “Banks may reduce the other spread components for the benefit of the borrower earlier than three years; Banks may, at their discretion, provide the option to switchover to fixed rate at the time of reset.”
Regarding lending against gold and silver, the RBI (Lending Against Gold and Silver Collateral – 1st Amendment Directions), 2025 expands eligibility beyond jewellers. Borrowers using gold as raw material for manufacturing or industrial processing can now avail such loans. Tier 3 and Tier 4 Urban Co-operative Banks are also permitted to provide these loans, similar to scheduled commercial banks.
The RBI (Basel III Capital Regulations – Perpetual Debt Instruments in Additional Tier 1 Capital – Eligible Limit for Instruments Denominated in Foreign Currency/Rupee Denominated Bonds Overseas) Directions, 2025 have also been notified, continuing to provide the framework for scheduled commercial banks, excluding regional rural banks.
In addition to these three mandatory directions effective October 1, 2025, the RBI has issued four draft guidelines for public feedback:
Gold Metal Loans (GML) Directions, 2025: Proposes extending the repayment period for jewellers from 180 to 270 days and allows domestic non-manufacturers outsourcing jewellery production to access GML.
Draft amendments to the Large Exposures Framework (LEF) and Intragroup Transactions and Exposures (ITE) Guidelines: Clarifies prudential treatment of exposures of Indian branches of foreign banks to their head offices, extends credit risk mitigation benefits, and links the ITE threshold to Tier-1 capital instead of paid-up capital and reserves.
Credit Information Reporting (1st Amendment) Directions, 2025: Proposes weekly submission of data to Credit Information Companies instead of fortnightly, faster error rectification, and inclusion of CKYC numbers in consumer records.
The RBI has invited public comments on these draft guidelines until October 20, 2025.
