Chennai, May 22 (IANS) Tamil Nadu Finance Minister Thangam Thennarasu, on Thursday, urged the Reserve Bank of India (RBI) to withdraw the recently imposed restrictions on gold loans, calling them detrimental to the interests of the poor and middle class.

In a strongly worded post on X, Thennarasu criticised the RBI’s decision to reduce the loan-to-value (LTV) ratio on gold loans to 75 per cent, along with introducing excessive documentation requirements.

He said these new regulations have created unnecessary hurdles for people who rely on gold loans during emergencies.

“At a time when the public is already burdened by the previous rule that prevents re-pledging of gold until full repayment, the imposition of nine more rigid guidelines is deeply insensitive,” the minister said.

He described the RBI’s move as “systemic injustice” against vulnerable sections of society, including economically disadvantaged families who often resort to gold loans as a last resort.

“The RBI must adopt compassionate and people-centric policies,” he added.

Sharing the same view, Tamil Maanila Congress (Moopanar) president G.K. Vasan also appealed to the RBI to reconsider its decision.

In a statement, Vasan highlighted the far-reaching implications of the restrictions, noting that they will impact not only low-income households but also micro and small enterprises, as well as farmers.

“These segments often depend on gold loans to meet urgent financial needs. By tightening access, the RBI is choking a key credit avenue for the poor and those in informal sectors,” Vasan said.

He urged the central bank to show flexibility and sensitivity by relaxing the norms for gold loans.

The RBI had earlier introduced a set of nine revised norms for gold loan disbursal and repayment to improve transparency and financial discipline.

However, critics argue that the move fails to account for the ground realities faced by common citizens, especially in rural and semi-urban areas where gold loans serve as a crucial source of liquidity.

Both Thennarasu and Vasan called for an immediate policy review to ensure that financial regulations do not come at the cost of people’s welfare.

–IANS

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