By hardening gold loan rules, RBI strangling farmers’ lifeline: Association
The national vice president of Bharatiya Kisan Sangh, T Perumal, said that the draconian rules would remove the only possible route for farmers to fulfil their dire need for funds through legitimate means for a nominal interest rate.
Reserve Bank of India (IANS)
CHENNAI: The recent Reserve Bank of India (RBI) draft guidelines on gold loans have weighed heavily on many farmers and ordinary people alike, raising concerns about the trouble they might face when pledging their precious metals during times of crisis.
The national vice president of Bharatiya Kisan Sangh, T Perumal, said that the draconian rules would remove the only possible route for farmers to fulfil their dire need for funds through legitimate means for a nominal interest rate. Farmers’ first resort in times of financial crisis is gold in possession, especially that which is ancestral in nature, he said. He added that mandating a sale receipt for such generational wealth is impractical and will hit the poor farming community badly.
After the new set of rules, farmers are wondering where to turn to in case of funding needs for farm activity or medical emergencies, as the farmer leader said that pledging gold with banks was their predominant mode to date. He said that private loan lenders are sharks and would charge a hefty sum of interest, making banks the only reliable option, which the RBI is taking away through its new guidelines.
The farmer leader said the current system has been functioning smoothly, and banks' risk factors are covered by auctioning the gold jewel given as collateral.
He wondered how farmers could ever get proof of ownership for jewels, while most of the family jewels have been handed over from generation to generation, and no records could be maintained. Perumal said that such new regulations would make farmers run from pillar to post for an ordinary and simple gold loan, where the collateral is pledged.
Further, he added that the banks have qualified appraisers whose job is to check the genuineness of the gold across all parameters to give their approval. Therefore, asking the farmers to obtain a test certificate was seen as simple harassment.
Moreover, the process would be time-consuming, as they would be forced to travel far from their residences to secure the same. Considering these parameters, he requested that the new RBI draft be reconsidered and the existing procedure be allowed to continue.
