Centre urges RBI to shield small gold loan borrowers

CHENNAI: Following concerns raised, mainly from Tamil Nadu, that the proposed norms for gold loans issued by the Reserve Bank of India will seriously affect small borrowers, the Department of Financial Services (DFS) functioning under the Union Ministry of Finance on Friday said that it has suggested to the RBI to ensure that the requirements of small gold loan borrowers are not adversely affected.

Leaders of parties across the political spectrum in Tamil Nadu had expressed concerns over the draft norms. Chief Minister MK Stalin on Wednesday wrote a letter to Union Finance Minister Nirmala Sitharaman, requesting her urgent intervention as the rules would disrupt access to credit, especially for farmers, and affect rural economy. He objected in particular to the rule to prohibit banks from accepting gold as security for agricultural loans of up to Rs 2 lakh.