All Kerala Gold & Silver Merchants Association (AKGSMA) has sought the intervention of the Finance Ministry for banking acceptance of 18K, 14K and 9K hallmarked gold ornaments as collateral for loans.
In a representation to the Union Finance Minister, Nirmala Sitharaman, the Association president K Surendran said the current practice of denying collateral value to legally hallmarked ornaments of lower purity levels is detrimental to both trade and public interest. These ornaments are legally manufactured, sold and hallmarked as per BIS guidelines.
Despite this legal and BIS-compliant status, the sector is witnessing a worrisome trend wherein scheduled commercial banks and financial institutions are refusing to accept 18K, 14K, and 9K hallmarked gold ornaments as collateral for gold loans. The reasons cited are either out-dated internal banking policies or lack of uniform guidelines from regulatory authorities, he said.
Depriving consumers of financial liquidity, especially those in the middle and lower-income segments who increasingly purchase these lower caratage ornaments for affordability. Negatively impacting the jewellery trade, he said customers are now hesitant to purchase lower-carat ornaments due to apprehensions regarding their utility as collateral.
Kerala was among the first states to fully implement mandatory Hallmark Unique Identification (HUID) for all gold ornaments, ensuring 100 per cent traceability and purity assurance. The entire retail ecosystem in the State has been aligned with the BIS guidelines, with all ornaments sold in the state being hallmarked, primarily in 22K purity.
The association requested the Finance Ministry to issue appropriate instructions to the Reserve Bank of India and the Indian Banks’ Association to ensure that all hallmarked ornaments—regardless of caratage (9K, 14K, 18K, or 22K)—are eligible for consideration as loan collateral, subject to valuation norms, S.Abdul Nazar, general secretary said.
A formal directive may be issued mandating banks to revise their internal gold loan policy documents to reflect the acceptability of all BIS-certified hallmarked ornaments across caratage levels. Many of the rejections at the branch level arise from lack of awareness. He urged the Ministry’s support for initiating a training and awareness programme for bank appraisers and officers, in collaboration with BIS and industry bodies.
In light of global gold pricing volatility, encouraging the circulation of legally hallmarked lower-carat jewellery serves the dual purpose of affordability for consumers and deeper financial inclusion, he added.
Published on July 28, 2025
