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RBI Announces Seven Reforms in Regulations-September 2025

October 06, 2025

Overview:

  • The Reserve Bank of India (RBI) made seven regulatory changes on September 29, 2025. Three of them become effective as of October 1, 2025, and four are draft proposals that are subject to public feedback until October 20, 2025.

I. Immediate Changes (Effective Oct 1, 2025)

  1. The policy rates can be transmitted faster:

    • Before the 3-year reset, banks are now able to lower the spread of floating-rate loans.
    • Impact: This will assist in speeding up the transmission of RBI rate cuts to borrowers, which may speed up the transmission of EMIs.
  2. Fixed Rates Option Now an option:
    • The law forcing lenders to provide an option to switch an floating rate loan into a fixed-rate loan has been repealed.
    • At this point, it is up to the lender to decide whether or not to provide this option at reset points.
  3. Expanded Gold Loan Scope:
    • Tier-3 and Tier-4 Urban Co-operative Banks may now lend on collateral of gold and silver.
    • Any business that uses gold as a raw material (e.g., electronics, pharmaceuticals) and needs working capital is now eligible to receive a working capital loan provided by any eligible bank, rather than jewellers.
  4. Opposite, Banks can raise Capital more easily:
    • The RBI revised Basel III requirements to raise the maximum allowed quota of overseas Perpetual Debt Instruments (PDIs) in the Additional Tier-1 capital of a bank.

II. Draft Proposals (To be Publicly Reviewed)

  1. Extended Duration of Gold Metal Loans (GML):

    • Offers a proposal to increase the maximum repayment period of GMLs to 270 days as opposed to the current 180 days.
  2. Greater Availability of Gold Metal Loans:
    • Manufacturing jewellers (those who do not outsource production) will be permitted in availing of GMLs.
  3. LEF Tweaks:
    • Equivalent to the LEF of foreign bank branches and Intragroup Transactions and Exposures (ITE).
    • Permits broader recognition of credit risk benefits.
  4. More Rapid Data Reporting of Credits:
    • Credit Institutions (CIs) are required to submit credit information every week rather than every fortnight to the bureaus.
    • Where possible, CKYC data should be presented in consumer credit reports.

Background: Gold Metal Loans (GML) & Recent Rules.

  1. In 1998, GML scheme was introduced to enable jewellery manufacturers to borrow physical gold.

  2. Recent Rules (June 2025): Added consumption gold loans tiered LTV ratios:

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