The Reserve Bank of India (RBI) has rolled out seven new directions / circulars, effective from October 1, impacting banks’ operations in areas such as interest rates on advances, lending against gold and silver collateral, and capital regulations.
Alongside these enforceable mandates, the RBI has released four draft guidelines inviting public comment on reforms related to gold metal loans, large exposures, intragroup transactions, and credit information reporting.
In its statement, the Reserve Bank of India (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 Reserve Bank of India (Interest Rate on Advances) (Amendment Directions), 2025, the regime for floating-rate retail and MSME loans is being modified. Previously, banks could alter spread components (excluding credit risk premiums) only once every three years. Now, banks may reduce the other spread components for the benefit of the borrower earlier than three years.
Additionally, for EMI-based personal loans, banks may now, at their discretion, provide the option to switchover to fixed rate at the time of reset.
The Lending Against Gold and Silver Collateral – 1st Amendment Directions, 2025 expands access to gold-backed lending. Earlier, only jewellers could borrow against gold collateral under the carve-out. Now:
Borrowers who use gold as raw material in manufacturing or industrial processing will be eligible.
Tier 3 and Tier 4 Urban Co-operative Banks are now allowed to offer such loans, bringing them in line with scheduled commercial banks.
Under the revised Basel III Capital Regulations, 2025 directions for Perpetual Debt Instruments in Additional Tier 1 capital, banks (other than regional rural banks) will continue to follow a regulatory framework, but with updated eligible limits for instruments denominated in foreign currency or rupee-denominated bonds issued overseas.
The RBI has also released four draft guidelines for consultation, with feedback invited until October 20, 2025.
The repayment ceiling for jewellers is proposed to extend from 180 days to 270 days.
The draft allows GMLs to domestic non-manufacturers who outsource jewellery production.
The draft amendments aim to clarify prudential treatment of exposures of Indian branches of foreign banks to their head offices.
Credit risk mitigation benefits may be extended.
The ITE threshold is proposed to be linked to Tier 1 capital rather than paid-up capital and reserves.
Credit institutions may have to submit data to Credit Information Companies weekly instead of fortnightly.
Proposals also include faster data submission, quicker error rectification, and mandatory capturing of CKYC numbers in consumer records.
By issuing seven binding directions from October 1, 2025, and releasing four draft guidelines open for public consultation, the RBI is signaling a shift toward greater flexibility, efficiency, and regulatory tightening in India’s banking sector.
The changes aim to accelerate rate transmission, broaden access to gold-backed credit, and fortify prudential norms around exposures, intragroup dealings, and credit data flows.
For banks, the new norms demand readiness in processes, systems, and compliance. For borrowers, especially in the retail, MSME, and gold-based sectors, these reforms could translate into more flexibility and improved access to credit. As stakeholders weigh in until October 20, the final shape of these reforms may evolve — but the direction is clear: a more responsive, robust banking regulation landscape.