Mumbai, April 9 -- The Reserve Bank of India on Wednesday issued a draft circular proposing measures to strengthen norms for loans given against gold ornaments and jewellery.

These include classifying gold loans as 'income generating' and 'consumption' loans, setting a floor price for gold auctions, allowing top-up loans or loan renewals only against existing gold loans classified as 'standard', and barring loans against gold-based securities such as gold ETFs and gold mutual funds.

The norms will also apply to loans secured by silver jewellery, silver ornaments and specified silver coins "wherever lenders are permitted to extend loans against such collaterals," the central bank said.

The revised framework proposes to harmonize such re...