• By Raju Kumar
  • Fri, 30 May 2025 04:39 PM (IST)
  • Source:JND

Gold Loan Row: Tamil Nadu Chief Minister MK Stalin on Friday appreciated the Ministry of Finance's move in which it asked the Reserve Bank of India (RBI) to ensure that the needs of small gold loan borrowers are not affected by the central bank's proposed new rules on lending against gold as collateral. A row erupted after the RBI issued fresh guidelines on gold loans. The political fraternity claimed that the new norms would have adverse impact on small borrowers.

"Glad to note that @FinMinIndia has responded to the concerns raised by me in my letter to the Hon'ble Union Finance Minister regarding @RBI’s draft guidelines on gold loans. Protecting the interests of small borrowers, especially those seeking loans below Rs. 2 lakh such as farmers and daily earners and ensuring timely and accessible credit has been my consistent demand. While appreciating the positive consideration given to this issue, we emphasize that such policies having significant impact on poor should be arrived after due prior consultation with States.," note posted by Stalin on X read.

Finance Ministry's Big Move On Gold loan regulations

Meanwhile, the Ministry of Finance asked the RBI to ensure that the needs of small gold loan borrowers are not affected by the central bank's proposed new rules.

The ministry, in a post on social media platform X, said that the Draft Directions on Lending Against Gold Collateral issued by the RBI have been reviewed by the Department of Financial Services (DFS) under the guidance of Union Finance Minister Nirmala Sitharaman.

The DFS has shared its suggestions with the RBI and asked the central bank to make sure that the new rules do not make it difficult for small borrowers to get gold loans. These borrowers often depend on small-ticket loans to meet urgent personal or business needs.

The post said "@DFS India has given suggestions to the @RBI to ensure that the requirements of the small gold loan borrowers are not adversely affected".

The finance ministry also said that these new guidelines may require time to be implemented properly at the ground level. Therefore, the DFS has suggested that the RBI implement the new directions from January 1, 2026.

To further protect small borrowers, the ministry has proposed that those taking loans below Rs 2 lakh should be kept out of the new requirements. This, it said, would help ensure faster and smoother disbursal of small gold loans.

The RBI is currently getting feedbacks from stakeholders on the draft guidelines. The Finance Ministry said that it expects the RBI to carefully consider the concerns raised by various stakeholders and suggestions from the public before finalising the rules.

What Are RBI's New Norms?

The Reserve Bank of India released draft guidelines to harmonise regulations for loans against gold as collateral. These rules apply to banks, cooperative banks, and NBFCs. 

RBI said loans against primary gold or bullion remain prohibited. The draft mandates standardised procedures for assaying gold, setting a maximum Loan-to-Value (LTV) ratio of 75 per cent for consumption loans, and capping bullet repayment loans to 12 months.

It restricts re-pledging and mandates clear documentation, borrower consent for surprise audits, and compensation for delays or collateral loss.

RBI aims to ensure transparency, reduce risks, and protect borrowers, especially through stricter auction norms and mandatory borrower communication.
(With ANI inputs)