India requests RBI to delay new gold loan regulations until January 1.

India requests RBI to delay new gold loan regulations until January 1.

The Department of Financial Services (DFS), under the Ministry of Finance, has recommended significant revisions to the Reserve Bank of India's (RBI) draft directions on lending against gold collateral. The recommendations aim to protect the interests of small-ticket borrowers, particularly those seeking loans below ₹2 lakh. The Finance Ministry has proposed exempting these borrowers from the new regulatory requirements to ensure timely and smooth disbursal of small-ticket gold loans [1].

The DFS has also recommended deferring the implementation of the new norms to January 1, 2026, allowing time for changes to take effect at the operational level. This move is likely to impact millions of small-scale borrowers who rely on gold loans for their financial needs [2].

The Ministry of Finance stated that the DFS examined the draft guidelines under the guidance of Union Finance Minister Nirmala Sitharaman and sent its feedback to the RBI. The RBI is currently reviewing the feedback received from stakeholders and the public before finalizing the directions [1].

The draft guidelines issued by the RBI in April aimed to establish uniform rules and regulations for getting gold loans from banks and non-banking financial companies (NBFCs). However, the draft rules imposed some restrictions regarding the type of gold that is eligible as collateral, the maximum loan amount a bank or NBFC can extend, and various payment rules. The RBI is now reviewing feedback received from various stakeholders, including public responses, before finalizing the guidelines [3].

The Finance Ministry's recommendations are a response to the practical challenges involved in immediate implementation. The Ministry highlighted that such guidelines will need time to implement at the field level and hence may be suitable for implementation from 1st January 2026 only [2].

The Reserve Bank of India, in its draft guidelines, proposed a uniform Loan-to-Value (LTV) cap of 75% for all NBFC gold loans. This cap could reduce the disbursement of gold loans to 55–60% from the current 65–68%, particularly in bullet repayment loans. Lenders would also need to cap the share of gold loans in their overall portfolios, with this ceiling reviewed periodically [2].

The Finance Ministry's suggestions have been formally communicated to the central bank. The RBI is expected to consider these inputs, including those from DFS, before finalizing the directions on gold loans [1].

References:
[1] https://www.cnbctv18.com/business/finance/rbi-gold-loan-draft-rules-dfs-recommends-relief-for-borrowers-rs-2-lakh-rollout-jan-2026-19612913.htm
[2] https://www.business-standard.com/industry/banking/rbi-asks-lenders-to-tighten-monitoring-of-gold-loan-portfolios-125052901875_1.html
[3] https://m.economictimes.com/industry/banking/finance/gold-loans-guidelines-finmin-urges-rbi-to-take-time-on-new-rules-implementation-muthoot-fin-manappuram-shares-rise/articleshow/121505676.cms