The Reserve Bank of India has made a fresh move to support Indian manufacturers using gold as a raw material. Now, banks are allowed to offer need-based working capital loans to these businesses, which were earlier available only to jewellers. This new rule is expected to boost industry growth and make gold-based manufacturing more transparent, safer, and accessible for entrepreneurs across India.
RBI’s New Guidelines Unveiled
Manufacturers who use gold in their production or industrial processes can now approach banks for working capital loans. The RBI announced these new directions on September 29, 2025, extending a special carve-out beyond the jewellery sector. Banks are still restricted from lending for the purchase of gold or silver, but for genuine business needs where gold is a raw material, banks now have the flexibility to provide loans directly.
What’s New for Manufacturers?
This rule applies not just to traditional jewellers, but to any manufacturer who needs gold as an input. Scheduled commercial banks, and even smaller urban co-operative banks, can now lend to such businesses. The RBI emphasized that gold should only be held for manufacturing, not investment or speculation.
Transparent & Safe Lending
The RBI gold loan guidelines set strict parameters to protect borrowers and make lending fair. The maximum loan-to-value (LTV) ratio has been capped at 75%, meaning businesses can borrow up to 75% of the value of their pledged gold. Gold must be properly valued, monitored, and securely stored during the loan period. If the loan is repaid, banks must release the gold promptly to the borrower.
How This Impacts Indian Industry
This move is likely to boost confidence among manufacturers working with gold, including those in the electronics, medical devices, and specialty manufacturing sectors. The process will now be fully transparent, and manufacturers will enjoy easier, safer access to short-term credit for their operations. The need-based approach ensures that only those using gold for genuine production receive the benefit.
Borrowers’ Benefits
- Quicker loan process for working capital needs.
- Standardised gold valuation and safe collateral storage.
- Fast release of pledged assets after repayment.
Conclusion
The RBI’s new guidelines mark a big step for the Indian industry, making working capital loans more accessible for gold-based manufacturers. These rules encourage responsible lending, improve borrower protections, and help more businesses tap into India’s love of gold for productive uses—driving jobs and growth across the country.
