Mumbai, April 9 -- The Reserve Bank of India (RBI) has issued draft guidelines to enhance regulatory oversight and bring uniformity in lending practices involving gold as collateral. The proposed directions aim to establish a harmonised framework applicable across all regulated entities (REs), address concerns around existing lending practices, and strengthen conduct-related aspects of gold loan operations.

According to the draft, lenders will be required to align their credit and risk management policies with specific norms for gold-backed lending. They must also put in place systems to periodically monitor the end-use of funds disbursed under such loans, ensuring transparency and accountability.

The draft also outlines that gold loan ...