New Delhi, May 30, 2025 — In a move aimed at protecting the interests of small borrowers, the Ministry of Finance has urged the Reserve Bank of India (RBI) to exempt gold loans up to ₹2 lakh from its upcoming regulatory framework. The ministry has also suggested that the new rules be enforced starting January 1, 2026, allowing time for institutions to adjust on the ground.
The RBI had earlier floated draft guidelines intended to tighten norms around gold-backed lending. These included a proposed reduction in the loan-to-value (LTV) ratio and stricter conditions around the use, monitoring, and storage of gold collateral. The central bank opened the draft for public consultation in April 2025, with responses sought by early May.
However, the Finance Ministry, through the Department of Financial Services (DFS), has raised concerns that these tighter regulations could unintentionally impact small-ticket borrowers, particularly in rural and semi-urban regions where gold loans are often the most accessible form of credit.
“Gold loans up to ₹2 lakh are largely availed by low-income households for urgent needs. Imposing tighter compliance on such loans could disrupt credit access for the vulnerable,” a senior official familiar with the discussions said.
The ministry’s proposal includes a request to delay the enforcement of new norms until January 2026, giving lenders — especially non-banking financial companies (NBFCs) — ample time to make necessary operational changes.
Following the recommendation, investor sentiment in gold finance companies turned positive. Shares of Muthoot Finance jumped over 6%, while Manappuram Finance also saw marginal gains during the day’s trade.
The RBI is currently reviewing feedback received from stakeholders and is expected to finalize the guidelines in the coming weeks. Whether the central bank accommodates the ministry’s suggestion remains to be seen, but analysts say the exemption could strike a crucial balance between regulatory oversight and financial inclusion.
