The Finance Ministry said on May 30 that it has reviewed the Reserve Bank of India’s (RBI) draft rules on gold loans and has recommended protecting small borrowers—those taking loans up to ₹2 lakh—from any negative impact.
After this announcement, shares of gold loan companies like Muthoot Finance and Manappuram Finance recovered from early losses.
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In a social media post, the Department of Financial Services (DFS) shared that it had given suggestions to the RBI. It emphasized that small gold loan borrowers should not face difficulties and that the new rules should be implemented from January 1, 2026, giving lenders time to prepare.
The DFS also advised the RBI to exclude small-ticket loans from the new guidelines to ensure quick and smooth disbursement of loans to these borrowers.
The Finance Ministry said the RBI is still reviewing public feedback and concerns from various stakeholders before finalizing the rules.
Earlier, on April 9, the RBI had issued draft guidelines for gold loans. These aimed to make gold loan rules more consistent and improve things like how loans are given, how gold is handled as collateral, and how the loan money is used.
While the RBI Governor said these rules are not meant to “tighten” anything, some lenders have raised concerns. They fear the new rules could slow down loan approvals and hurt business.
For example, the draft says lenders must complete full checks (underwriting) before giving the loan, which was more relaxed earlier. Industry experts say this could cause delays.
A report by Crisil Ratings warned that these rules could slow down growth for gold loan-focused companies, as they may need to reduce the loan amounts they give based on gold value.
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RBI wants more consistent regulations because of the rapid rise in gold loans, especially by banks.
Muthoot Finance, which recently reached ₹1 lakh crore in gold loans for FY25, said the RBI’s draft may be influenced by the entry of many new players in the gold loan market and the sharp 50% rise in gold prices over the last year.
George Alexander Muthoot, the Managing Director, said that the RBI might be concerned about how the market is evolving and wants to manage the risks.
