Gold loan industry wants RBI to defer the revised lending rule

Kolkata: The gold loan industry has urged the finance ministry and the Reserve Bank of India to defer revised lending guidelines by six months.

The new norms on lending against gold and silver collateral are scheduled to take effect from April 1.

The Association of Gold Loan Companies (AGLOC) has sought the deferment, citing geopolitical uncertainty and risks to credit access. The revised framework aims to strengthen regulation and promote responsible lending, and also permits loans against silver collateral.


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The new rules require borrowers to make full repayment of the principal and interest before repledging the asset, increasing their immediate financial burden. At present, borrowers could renew loans by paying only the interest.

The association said a temporary mismatch in customer cash flows has emerged due to disruptions in business activity, particularly in segments linked to fuel, LPG and logistics. Higher agricultural input costs are also affecting borrowers in the farm sector.

These conditions are likely to disproportionately impact lower- and middle-income segments that depend on timely access to formal credit, it said.

"AGLOC fully supports the Reserve Bank of India’s intent to strengthen regulatory standards. However, given the current environment and the need to ensure continued credit access, a calibrated deferment will enable a smoother and more effective implementation,” said Thomas George Muthoot, the association's vice president.

A calibrated and phased approach to implementation would help ensure a smoother transition while maintaining uninterrupted access to credit for these segments, the association said.