RBI enables banks to adjust loan rates more often, expand the loans to gold -based companies

The Reserve Bank of India has revised the rules for small business loans, so that banks can be adjusted more often to credit risks, offer options with a fixed interest and expand work capital financing to companies that use gold as a raw material. | Photocredit: Francis Mascarenhas/Reuters

The Reserve Bank of India (RBI) has adjusted rules for small business loans, so that the spread was charged for the credit risk that a borrower can be adjusted more often.

Banks also allowed more flexibility when lending to companies that use gold as a raw material.

The changes were announced late on Monday via a circular.

Spread -adjustments can happen more often

For loans to small companies, banks are allowed to adjust the extra interest or they are charged once every three years on the basis of the borrower of a borrower.

“Banks can reduce the other spread components earlier than three years,” said the RBI.

It added that banks can offer borrowers the option to switch to a loan with a fixed interest rate at the time of reset.

Flexible loans for gold -based companies

In a separate series of rules, the RBI gave more fluidity when providing loans to companies that use gold as a raw material.

Banks are generally not allowed to borrow for the purchase of gold and silver except as a working capital for jewelers.

Lenders can now use this provision to offer working capital to any borrower who uses gold as a raw material, the RBI said.

Published on September 30, 2025