Stalin urges Nirmala to advise RBI to reconsider new gold loan restrictions

Tamil Nadu Chief Minister M.K.Stalin on Wednesday wrote to Union Finance Minister Ms Nirmala Sitharaman urging her to advise the RBI to reconsider the new gold loan restrictions which would disrupt the rural credit delivery system.

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In a Demi-official to Ms Nirmala, copies of which were released to the media here, Mr Stalin stressed the need to to reconsider the proposed restrictions in the RBI (Lending against Gold collateral) Directions, 2025.

He expressed Tamil Nadu’s grave concern regarding the draft directions issued by the RBI on lending against gold collateral, which seek to prohibit banks from accepting gold as security for agricultural loans up to Rs.2 lakhs.

It is imperative that gold continue to be accepted as collateral for agricultural and allied loans up to Rs.2 lakhs, in recognition of its practical utility and the prevailing rural credit realities.

He said this proposal is likely to result in serious disruptions to the rural credit delivery system in Tamil Nadu and across many parts of South India, where gold-backed loans serve as a primary source of timely, short-term agricultural credit, especially for small and marginal farmers, tenant cultivators, and those engaged in allied sectors such as dairy, poultry, and fisheries.