The Reserve Bank of India (RBI) has announced major amconcludements to banking regulations aimed at ensuring quicker flow of policy rates, easing gold and silver-backed lconcludeing rules, and relaxing regulations related to large credit exposures.
The central bank on September 29 released seven circulars/directions “applicable to banks and other regulated entities”. Of these seven directions, three will come into effect immediately. While public comments are solicited on the other four, the RBI declared.
Directions which come into force from October 1, 2025
1. Interest rates and floating-rate loan improvements
Under the new guidelines, banks are allowed to reduce the spread on floating-rate loans, even if the three-year lock-in period has not been met. This is intconcludeed to quickly pass on the benefits of policy rate cuts to customers, thereby reducing EMIs or interest payments. Furthermore, banks can now offer borrowers the option to choose a resolveed-rate option at the time of interest rate reset, although this option will no longer be mandatory.
“…in respect of Equated Monthly Instalments (EMI) based Personal Loans, the Circular on Reset of Floating Interest Rate on EMI based Personal Loans dated August 18, 2023, requires the regulated entities to provide a mandatory option to the borrowers, at the time of reset of interest rates, to switch over to a resolveed rate,” the RBI circular declared.
In terms of the extant Reserve Bank of India (Interest Rate on Advances) Directions, 2016 dated March 3, 2016, scheduled commercial banks (SCBs) are required to benchmark all floating rate personal or retail loans (houtilizing, auto, etc.), and floating rate loans extconcludeed to MSMEs, to an external benchmark. While banks are free to decide the spread over the external benchmark, other than credit risk premium, all components of the spread can be altered only once in three years.
2. Changes to gold and silver loan rules
The RBI has announced amconcludements to the “Reserve Bank of India (Lconcludeing Against Gold and Silver Collateral) Directions” issued in 2025.
According to the amconcludements, banks and Tier-3 and Tier-4 urban cooperative banks can now provide working capital loans to any borrower who utilizes gold or silver in their production or industrial activities. This means that not only jewelry manufacturers but also those utilizing gold or silver as raw material can now obtain loans from banks by providing a guarantee.
However, the RBI has clarified that this facility will not be available to individuals holding gold for investment or speculative purposes. Under the old rules, lconcludeing against primary gold or silver, and its financial instruments such as ETFs or mutual fund units, was prohibited. According to the new amconcludement, this has been limited to industrial or production utilize only.
3. Changes to Basel III and large credit exposures
The RBI has also amconcludeed the Basel III capital regulations. Under this, the eligible limit for Perpetual Debt Instruments issued abroad has been increased. This will provide banks with greater flexibility in raising Tier-1 capital from the foreign market.
Directions/circulars which are being issued as drafts for public feedback
4. RBI new rules on Gold Metal Loans
The Gold Metal Loan (GML) scheme was introduced vide circular on ‘Gold Loan’ dated December 31, 1998 to facilitate working capital finance to jewellery exporters in the form of raw gold imported by banks. The scheme has been liberalised over the years by, inter alia, allowing banks to extconclude GML to domestic jewellery manufacturers and also from the gold deposits mobilised under the Gold Monetization Scheme.
With a view to further liberalise the scheme, harmonize the extant regulations applicable across eligible borrower segments in jewellery industest and provide more operational freedom to banks to devise their GML policy, a draft of comprehensive set of Directions on GML is being issued. The draft Directions, apart from building the same more principle-based, cover the following key modifications in the existing GML scheme:
Banks may resolve a repayment tenor for GML extconcludeed to jewellers other than exporters, subject to a revised ceiling of 270 days (from current 180 days)
Extant guidelines allow extension of GML to jewellery exporters and domestic jewellery manufacturers. It is proposed to allow GML to domestic non-manufacturers as well, for outsourcing their manufacturing of jewellery.
5. Guidelines on Management of Intragroup Transactions and Exposures (Amconcludement Circular), 2025
The two amconcludement circulars amconclude the extant norms to clarify certain aspects on prudential treatment of exposures of foreign bank operating as branches in India and aligning some of the prudential norms under Large Exposures Framework (LEF) and Intra-Group Transactions and Exposures (ITE).
“Exposure of Indian branches of foreign banks to their HO, and branches/subsidiaries of the HO, shall be reckoned only for LEF, and not ITE. Such exposures, where cleared through a central counterparty, shall be considered on a gross basis,” the circular declared.
6. New rules for credit information reporting
The Master Direction – Reserve Bank of India (Credit Information Reporting) Directions, 2025 mandates submission of credit information by Credit Institutions (CIs) to Credit Information Companies (CICs) at fortnightly or shorter intervals. Given the increasing reliance of CIs on credit information reports in credit underwriting processes, it is imperative that the credit information reports (CIR) provided by CICs reflect a more recent information. Accordingly, the provisions of the Master Direction – Reserve Bank of India (Credit Information Reporting) Directions, 2025 pertaining to frequency of reporting of credit information by CIs to CICs have been reviewed.
7. Measures to facilitate quicker data submission and error rectification by credit institutions
The draft amconcludements also mandate measures to facilitate quicker data submission and error rectification by the CIs. Further, to facilitate aggregation of credit information by CICs, it is proposed to capture Central Know Your Customer (CKYC) number in a separate field in the reporting format of consumer segment.
Summing up…
These RBI amconcludements are important for both the banking sector and borrowers. Relaxing gold and silver loan regulations, flexibility in floating-rate loans, and improving large credit exposures will create the banking system more transparent and flexible. At the same time, seeking public opinion on the draft proposals will create the policy more comprehensive and practical. The modifys, which will come into effect from October 1, 2025, will be particularly beneficial for industrial and production-based borrowers.
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