In a move that may possibly be a sign of upcoming measures on gold, the finance ministry has directed bullion-importing banks to furnish detailed information on gold metal loans and loans backed by gold from 2023 onwards.Despite a lower import volume of 721 tonnes compared with the previous year, India’s gold import bill rose 24% to a record $71.9 billion in 2025-26.The dozen banks involved in gold imports either borrow gold from international lenders and extend it to jewellers through gold metal loans, or procure the metal from overseas banks under a consignment arrangement, making outright payments based on confirmed demand from domestic wholesale buyers.According to two people familiar with the matter, the Department of Financial Services sought details through a communication sent to banks on Friday evening. The information requested includes the value and volume of gold metal loans, customer counts, international gold suppliers, portfolio sizes, collateral amounts and the number of borrowers. “Banks were asked to submit the data by Monday. In some instances, month-wise figures were provided. Following the increase in import duty on gold to 15%, restoring it to pre-July 2024 levels, and the subsequent restrictions on silver imports, there is a view that further steps could be announced soon,” a senior banker told ET.The person added that June and July are typically slow months for gold demand, and with imports having declined in May, the current period may be suitable for examining policy options. Another person said the Reserve Bank of India had recently asked banks to estimate their gold metal loan exposure for the current year before the finance ministry’s communication was issued.
Why Gold metal loans (GMLs) are in focus
Gold metal loans (GMLs), which were introduced in 1998 for exporters and later extended to jewellers, were briefly suspended for a month in 2013. Banks maintain strict oversight of how these loans are utilised. “Even if no major policy action is taken, the industry has suggested several measures that could help moderate imports without affecting supply,” a source said.Industry participants said a bullion trade body has proposed that banks use gold bars refined from dore instead of importing fresh gold for issuing GMLs to jewellers. Dore, or unrefined gold, is processed by domestic refineries before being converted into refined bars. “Once the refining process is complete, the gold can be supplied through GMLs. Similarly, gold exchange-traded funds (ETFs) could purchase bars refined from dore rather than imported gold, which would help reduce import dependence,” an industry executive said. Recently, four mutual fund houses placed restrictions on subscriptions to gold-linked schemes.During a meeting with the RBI on Monday, industry representatives also raised the possibility of permitting gold exports under specific conditions. “When domestic demand is weak and discounts are significant, some flexibility could be provided to export unsold gold to consuming markets such as China and Turkey. At present, banks can return surplus gold to overseas bullion suppliers like JP Morgan and Standard Chartered, but a broader export framework could help ease pressure on both the rupee and the current account deficit,” a source said.Banks have additionally provided details relating to remittances used for dore imports.Another person familiar with the discussions said a range of proposals has been floated across different forums. These include restricting cash purchases of gold, creating a mechanism to channel household bullion holdings into the system by lending them to jewellers through structures similar to GMLs, reserving a portion of imported gold for exporters on the lines of the 2013 80:20 scheme, and reviewing the existing consignment model.
