NewKerala.com

Key Points

The Ministry of Finance has recommended the Reserve Bank of India to protect small borrowers by excluding loans under Rs 2 lakh from upcoming gold loan regulations. Union Finance Minister Nirmala Sitharaman guided this review by the Department of Financial Services, urging RBI to address the financial needs of small borrowers dependent on such loans. The ministry suggests implementing the new regulations from January 1, 2026, giving time for proper groundwork. The RBI is currently considering feedback from stakeholders and the public before finalizing these draft guidelines.

Key Points: Finance Ministry Urges RBI to Protect Small Gold Loan Borrowers

  • Ministry reviews RBI's draft on gold loans
  • Seeks exemption for loans below Rs 2 lakh
  • New rules may take effect from January 2026
  • Feedback invited from stakeholders
2 min read

Finance Ministry asked RBI to keep small borrowers up to Rs 2 lakh out of proposed Gold loan regulations

Ministry urges RBI to exclude loans under Rs 2 lakh from new gold loan rules to protect small borrowers.

"Ensure small gold loan borrowers' needs are not adversely affected. - Finance Ministry"

New Delhi, May 30

The Ministry of Finance on Friday said it has 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.

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.

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.

- ANI

Share this article:

Reader Comments

R
Rajesh K.
This is a sensible move by Finance Ministry. In villages, gold loans are often the only option for emergencies. My cousin took ₹50k loan last year for his daughter's medical treatment. If rules become too strict, poor families will suffer. Good they're keeping small loans simple 🙏
P
Priya M.
While protection is needed, RBI's regulations seem necessary to prevent exploitation. Many NBFCs charge exorbitant interest on gold loans. The 75% LTV cap is reasonable - prevents over-borrowing. But yes, exceptions for small borrowers make sense as they're most vulnerable.
A
Arun S.
Gold loans are the backbone of small businesses in South India. My textile shop runs on such loans during off-season. ₹2 lakh limit is perfect - covers urgent needs without paperwork hassles. Hope RBI listens to FM's suggestions. #SupportSmallBusiness
S
Sunita R.
Concerned about the 12-month repayment cap. Many farmers need longer cycles matching harvest seasons. Govt should consider agricultural gold loans separately. Otherwise, this may push people towards unregulated lenders. Good initiative but needs more ground-level study.
V
Vikram J.
Transparency measures are welcome! Last year, my mother's gold chain was under-valued during appraisal. Clear documentation and surprise audits will prevent such malpractices. But implementation must be practical - can't expect rural borrowers to understand complex paperwork.
N
Neha T.
Smart balancing act by FM Sitharaman! Protecting small borrowers while bringing discipline to the sector. The 2026 timeline gives enough adjustment period. Hope RBI maintains this middle path - over-regulation kills informal credit systems that millions depend on. 👍

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50