A gold metal loan (GML) is a method that allows jewellery manufacturers to borrow gold instead of rupees and pay off the GML with the money they make from sales.
According to current RBI rules, banks that have been designated to import gold may lend domestic jewellery manufacturers gold (metal) for export or non-export purposes. Only gold jewellers who are also gold jewellery producers are eligible for a gold (metal) loan. Jewellers who have taken out loans through the Gold Metal Loan (GML) Scheme are not permitted to sell their gold to third parties. In light of the ongoing volatility in gold prices, banks obtain sufficient margin and collateral security for bank financing.
GML providing banks also do extending gold metal loans to jewellers on the basis of StandBy Letter of Credit (SBLC) / Bank Guarantee (BG) issued by other banks (non-nominated banks for GML)
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