RBI Eases Credit Rules for Small Businesses, Gold Users
The Reserve Bank of India (RBI) has announced regulatory changes to widen credit access for small businesses and for firms using gold as a raw material. The new rules were released via a circular on September 30, 2025.
More Flexible Rate Adjustments for SMEs
Under the revised norms, lenders may now adjust interest-rate spreads tied to credit risk on small business loans more frequently than before. While spreads based on a borrower’s credit profile can shift only once every three years, other components of the spread may be lowered sooner in the borrower’s favor. Additionally, borrowers will have the option to convert to a fixed-rate loan at each reset.
Expanded Lending via Gold-Based Firms
The RBI has also relaxed restrictions on lending to businesses that use gold as a raw material. Earlier, banks could extend working capital loans secured by gold only to jewellers. Now, any enterprise that relies on gold in production can access such gold-backed working capital lines.
Impacts & Outlook
These changes aim to boost liquidity and flexibility in credit markets, especially for small and gold-user industries. Observers expect the adjustments to help industries with tight cash flows and those in jewellery, electronics, and luxury goods sectors. The broader goal is faster transmission of monetary policy to real sectors.
