Finance Ministry Pushes for Small Borrower Exemption in Gold Loan Guidelines
The finance ministry has reviewed the Reserve Bank of India's draft guidelines on gold loans, recommending that small borrowers with loans up to Rs 2 lakh be excluded from new regulations. This move comes amid opposition from political parties and concerns in Tamil Nadu's farming community about the guidelines' impact.
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- India
On Friday, the finance ministry announced its review of the Reserve Bank of India's draft guidelines on gold loans, urging the exclusion of small borrowers with loans up to Rs 2 lakh from the proposed regulations. This recommendation highlights concerns about the draft's implications for those in need of quick financial assistance.
Issued on April 9, the RBI's comprehensive draft guidelines aim to standardize the regulatory framework for gold loans, improving underwriting and collateral management while ensuring funds are used appropriately. These guidelines propose a loan-to-value ratio cap of 75% for loans backed by gold.
The Department of Financial Services, under Finance Minister Nirmala Sitharaman, has advised that the guidelines be implemented by January 1, 2026, and has called for an exemption for small-ticket loans. Public feedback is being assessed, and Tamil Nadu leaders, including Chief Minister M K Stalin, have voiced their opposition due to the potential impact on farmers and rural economies.
(With inputs from agencies.)
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