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      Question

      Consider the following statements regarding the RBI’s

      July 2025 guidelines on Lending Against Gold and Silver Collateral for Agriculture and MSME Loans: Statement I: The Reserve Bank clarified that loans sanctioned against voluntary pledge of gold and silver as collateral will be considered a violation of collateral-free lending norms. Statement II: The clarification applies to loans sanctioned up to the collateral-free limit under agricultural and MSME lending guidelines. Statement III: These directions apply to all Scheduled Commercial Banks, Regional Rural Banks, Small Finance Banks, State Co-operative Banks, and District Central Co-operative Banks. Which of the above statements is/are correct?
      A I only Correct Answer Incorrect Answer
      B II and III only Correct Answer Incorrect Answer
      C I and II only Correct Answer Incorrect Answer
      D III only Correct Answer Incorrect Answer
      E I, II, and III Correct Answer Incorrect Answer

      Solution

      • The RBI circular dated July 11, 2025, clarifies that voluntary pledge of gold and silver as collateral will not be treated as a violation of collateral-free loan norms for agriculture and MSMEs. • The clarification specifically applies to loans sanctioned up to the collateral-free limit as per the relevant Master Directions on agriculture and MSME lending. • The directions were issued to all Scheduled Commercial Banks (including RRBs and Small Finance Banks) and all State and District Central Co-operative Banks. • Hence, Statement I is incorrect, while Statements II and III are correct.

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