• The Finance Ministry has advised the RBI to ensure draft gold loan norms do not hurt small borrowers, especially those taking loans up to Rs 2 lakh.
• It also suggested postponing implementation to January 1, 2026, and excluding small-ticket loans from stricter rules.
• The RBI is reviewing stakeholder feedback before finalizing the guidelines.

The Ministry of Finance has suggested to the Reserve Bank of India (RBI) that its upcoming regulations regarding gold loans should not adversely affect small borrowers, especially those seeking loans of up to Rs 2 lakh. This recommendation is part of the ministry's review of the RBI’s draft guidelines on loans secured by gold, released on April 9.

In a post on social media, the Department of Financial Services (DFS) stressed the importance of ensuring timely and straightforward access to credit for borrowers who take small gold loans. The department also proposed that the enforcement of the suggested regulations be postponed until January 1, 2026, to provide ample time for implementation at the ground level.

“DFS India has given suggestions to the RBI to ensure that the requirements of the small gold loan borrowers are not adversely affected,” the ministry stated. It also proposed excluding small-ticket loans from the purview of the new norms to ensure quick and efficient disbursements.

Shares of prominent gold loan companies like Muthoot Finance and Manappuram Finance recovered from their initial declines after the Finance Ministry made its announcement, alleviating market worries about stricter regulations. The RBI's proposed guidelines seek to establish a principle-based and unified regulatory framework for gold loans.

This framework emphasizes improved underwriting procedures, enhanced collateral management, and more vigilant monitoring of how funds are used. Nevertheless, lenders have voiced concerns that these proposals might lead to delays in loan disbursements and negatively affect profitability.

The Finance Ministry mentioned that the RBI is in the process of evaluating feedback from different stakeholders, including public contributions, and anticipates that these insights will be taken into account before the new guidelines are finalized. RBI Governor Shaktikanta Das previously stated that the purpose of the draft regulations is not to impose stricter rules but to rationalize and simplify the current practices in the gold loan sector.