New gold loan rules hit poor, RBI must roll back: State Minister Thangam Thennarasu

CHENNAI: State Finance Minister Thangam Thennarasu on Thursday urged the Reserve Bank of India to immediately withdraw the newly imposed restrictions on gold loans. Describing the new guidelines on gold loans a bolt out of the blue for the common man, Thennarasu posted on X: “Reducing the loan-to-value ratio to 75% and burdening borrowers with excessive documentation gravely affects 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 amount to systemic injustice against the vulnerable. The RBI must adopt compassionate, people-centric policies,” Thennarasu added.

Earlier, TNCC president K Selvaperunthagai echoed similar views, saying if the new guidelines were continued, it would encourage private lenders and will impact middle class traders.

The guideline insisting that the borrower must produce the receipt of gold purchased, quality certificate, certificate of ownership and renewal of the pawned gold only on payment of the full premium with interest has affected the people, Selvaperunthagai said, and added that the new rules would discourage the people from approaching banks, the trusted institutions for availing loans due to low interest and safety.

"People don't usually keep gold purchase receipts, and gold is gifted during weddings. The purity certificate will be an additional expense on customers. It is the responsibility of banks to find out the purity of gold and lend money," said CH Venkatachalam, general secretary, All India Bank Employees Association.