Chennai, May 26 (IANS) The Non-Resident Tamils Welfare Board (NRTWB), functioning under the Tamil Nadu government, has appealed to Union Finance Minister Nirmala Sitharaman to intervene and roll back the Reserve Bank of India’s (RBI) new guidelines on gold loans, citing severe hardship to the general public.
In a letter to the Union Minister, NRTWB Chairperson Karthikeya Sivasenapathy urged the Centre to instruct the RBI to withdraw or substantially revise the guidelines after wide consultation with stakeholders, including state governments, Members of Parliament, and grassroots banking networks.
“At a time when the Government of India is actively promoting financial inclusion and working to reduce rural indebtedness, these guidelines inadvertently benefit private financiers and moneylenders. They threaten to push public sector banks out of a vital segment,” Sivasenapathy warned.
He emphasised that gold loans, especially from public sector banks, have long been a critical source of financial support for millions of people during times of distress, whether for education, medical emergencies, farming needs, or social obligations.
Highlighting specific concerns, he pointed to the recent reduction in the Loan-to-Value (LTV) ratio, stricter documentation requirements, and the insistence on original purchase receipts and ownership proof as significant barriers for the common man.
Delays in the return of pledged gold have also caused distress among borrowers.
“These measures will only serve to push people toward non-banking financial companies (NBFCs) and informal lenders, who often charge exorbitant interest rates. This not only undermines the credibility of the public banking system but also threatens to undo years of progress made in advancing financial inclusion in rural and semi-urban India,” he added.
Sivasenapathy also flagged the potential fallout for the Micro, Small, and Medium Enterprises (MSME) sector and the agricultural community, both of which rely heavily on accessible and timely credit through gold loans.
Calling for immediate intervention, the NRTWB urged the Union government to direct the RBI to review the guidelines in a more inclusive and consultative manner, ensuring that the needs of vulnerable sections are safeguarded.
–IANS
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