In a communique to banks on Friday evening, the Department of Financial Services sought data on value and quantity of gold metal loans (GMLs), number of customers, international gold suppliers as well as portfolio size, quantum of collateral and numbers of borrowers, two persons told ET.
“Banks were told to give the information by Monday. In some cases, month-wise numbers were given. After the import duty hike to 15% to pre-July 2024 level and subsequent restrictions on silver imports, there’s a feeling that certain steps may follow in the near term,” said a senior banker.
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Since June-July are lean months, and with gold import down in May, it’s a good time to explore options, said the person. Shortly before the ministry contacted banks, the Reserve Bank of India (RBI) had asked them to estimate GMLs for the current year, said another person.
The dozen importing banks either borrow gold from international banks to on-lend to jewellers, or follow a consignment method where gold is sourced from the global banks against outright payment on the back of specific demands from wholesale local buyers.
‘USE REFINED DORE FOR GML, ETF’
GML, introduced in 1998 for exporters and subsequently extended to jewellers, was temporarily stopped for a month in 2013. Banks closely monitor GML end-use. “Even if there’s no drastic decision, the industry has offered ways to temper imports while preserving supply,” said a source.
According to trade circles, a bullion industry association has suggested that instead of importing fresh gold for GML, banks could use bars refined from dore gold for GML to jewellers. Dore or impure gold is processed by domestic refineries. “Once refined, it can be given as GML. Similarly, gold exchange traded funds (ETFs) can procure refined dore bars instead of buying imported gold. This would lower imports,” said an industry person.
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The industry lobby which met RBI on Monday has also broached the idea of allowing gold exports under certain circumstances. “When there’s little demand and deep discount in India, some flexibility can be given to export unsold gold to consuming markets like China and Turkey. Today, a bank can return excess gold to foreign bullion suppliers like JP Morgan and Stanchart, but a wider export policy may reduce pressure on rupee and current account deficit,” said a source.
Banks have also shared data on remittance for dore import.
Gold imports surged 24% to a new high of $71.9 bn in 2025-26 though quantity imported at 721 tonnes was lower than the previous year’s.
“Various suggestions were made in different forums. These include curbing cash payment for gold purchase, creating a framework to recycle bullion holdings of households by lending to jewellers like as GML, fixing a quota so that a part of the imported gold goes to exporters, similar to the 80:20 scheme of 2013, and even reviewing the consignment mechanism,” said another person.
Banks are paying GST upfront on import since May with the government not renewing the exemption. After this, some exporters to whom the gold is sold are facing uncertainty in obtaining refund, said an industry official.