Centre recommends delaying RBI's new gold-loan rules, seeks relief for small borrowers
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The Union finance ministry on Friday said it has reviewed the Reserve Bank of India's draft rules on gold loans and recommended excluding borrowers with loans under Rs 2 lakh from the new guidelines.
The suggestion aims to protect small borrowers, especially in rural areas, from any unintended difficulties the proposed rules might cause. This follows the opposition against the RBI rules by a few political parties in Tamil Nadu.
The Reserve Bank had released a draft policy on April 9, 2025, seeking to tighten rules around loans taken against gold. These include capping the loan-to-value (LTV) ratio at 75%, strengthening checks on how the money is used, and improving how banks and NBFCs manage gold kept as collateral.
However, the finance ministry, under the guidance of finance minister Nirmala Sitharaman, has told the RBI that small borrowers—those taking less than Rs 2 lakh—should be left out of these strict norms to ensure quick and easy access to credit. The ministry also recommended delaying the start of the new rules until January 1, 2026, to give lenders enough time to adjust.
The recommendations come after political opposition in Tamil Nadu. Local parties and farmer groups protest the RBI's draft rules, saying they could hurt people who rely on gold loans for emergencies or farming expenses. Tamil Nadu chief minister M K Stalin also wrote to Sitharaman, asking her to intervene, saying the guidelines could seriously affect rural borrowers.
RBI is currently reviewing feedback from the public and stakeholders. A final decision on the implementation of the new rules is expected in the coming months.
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