Tamil Nadu Finance Minister Thangam Thennarasu has urged the Reserve Bank of India (RBI) to reconsider the new restrictions proposed for gold loans.

RBI recently issued draft guidelines to streamline and standardise the procedure for issuing gold-backed loans by banks and NBFCs. These guidelines include restrictions on eligible collateral, caps on loan amounts, and mandatory procedures for valuation and documentation.

Thennarasu took to the social media platform X to express his concern about RBI’s proposal to reduce the loan-to-value ratio of gold loans to 75 per cent for all gold loan products. Earlier, it was 80 per cent for certain segments of such loans.

“I urge the RBI to immediately withdraw the newly imposed restrictions on gold loans. Reducing the loan-to-value ratio to 75 per cent and burdening borrowers with excessive documentation gravely affect poor and middle-class families who depend on such loans during emergencies. At a time when people are still reeling from the earlier rule that disallows re-pledging until full repayment, the introduction of nine more rigid guidelines is deeply insensitive,” the State Finance Minister said in the post.

These measures amount to systemic injustice against the vulnerable. The RBI must adopt compassionate, people-centric policies, he added.

Separately, G.K. Vasan, President of Tamil Maanila Congress (Moopanar), said in a statement that RBI’s restrictions will affect not only the poor and middle class but also small and marginal businesses and large agricultural households.

Courtesy: thehindubusinessline