'Systemic Injustice': Tamil Nadu Finance Minister Urges RBI To Reconsider Gold Loan Restrictions

Tamil Nadu Finance Minister Thangam Thennarasu has called on the Reserve Bank of India (RBI) to roll back recent restrictions on gold loans, arguing that the revised rules unfairly impact the poor and middle-class communities. In a post shared on social media platform X, Thennarasu strongly criticised the RBI’s move to lower the loan-to-value (LTV) ratio for gold loans to 75 percent and introduce more stringent documentation requirements.

'Adopt People-Centric Policies': Thangam Thennarasu

According to Thangam Thennarasu, the new guidelines pose significant challenges for those who depend on gold loans during times of financial distress.

"I urge the RBI to immediately withdraw the newly imposed restrictions on gold loans. Reducing the loan-to-value ratio to 75% and burdening borrowers with excessive documentation gravely affects poor and middle-class families who depend on such loans during emergencies," he said. 

At a time when people are still reeling from the earlier rule that disallows re-pledging until full repayment, he said, "The introduction of 9 more rigid guidelines is deeply insensitive. These measures amount to systemic injustice against the vulnerable. The RBI must adopt compassionate, people-centric policies."

Echoing similar concerns, GK Vasan, president of the Tamil Maanila Congress (Moopanar), also appealed for a review of the decision. In a public statement, Vasan pointed out that the revised rules could severely affect low-income families, small businesses, and farmers who often rely on gold loans to meet urgent needs.

“By tightening access to one of the most widely used sources of emergency credit, the RBI is putting undue pressure on already struggling sections of society,” Vasan said. He emphasised the need for regulatory flexibility and urged the central bank to ease the recently imposed norms.

The RBI introduced the revised rules for gold loan disbursal and repayment in a bid to enhance transparency and enforce financial discipline. However, critics argue that the measures fail to reflect the socioeconomic challenges faced by people in rural and semi-urban regions, where formal credit options remain limited.

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