This document summarizes the Indian government's response to concerns raised by the Chief Minister of Tamil Nadu regarding the Reserve Bank of India's (RBI) draft guidelines on lending against gold collateral. The Chief Minister's letter specifically requested a review of the draft guidelines issued on April 9, 2025, which imposed stricter restrictions on gold loans, particularly concerning small ticket borrowers and farmers.
The government, through the Ministry of Finance, confirmed receiving the letter and subsequently requested the RBI to consider excluding small borrowers, including farmers, from the proposed linkage of sanction amount with repayment capacity and the requirement of proof of ownership.
In response, the RBI issued comprehensive "Directions on Lending against Gold and Silver Collateral" on June 6, 2025, after considering feedback from various stakeholders. These directions aim to create a harmonized regulatory framework addressing prudential and conduct-related gaps across all regulated entities.
The new directions apply to all loans offered for consumption or income generation, including farm credit, where gold or silver is accepted as collateral. Key features of the directions include:
* Detailed credit assessment, including borrower repayment capacity, for loans exceeding ₹2.5 lakh.
* A maximum permissible Loan to Value (LTV) ratio of 85% for total consumption loans up to ₹2.5 lakh.
* Communication with borrowers in the local language or a language of their choice.
* Renewal of bullet repayment loans upon payment of accrued interest.
Key Entities Referenced
Reserve Bank of India: The central bank of India, referred to as RBI, which issued draft guidelines on lending against gold security.
Tamil Nadu: A state in India whose Chief Minister requested a review of RBI's draft guidelines.
Chief Minister of Tamil Nadu: The head of the state government of Tamil Nadu, who wrote a letter regarding the gold loan guidelines.
Ministry of Finance: A department of the Government of India.
Lending Against Gold Security Guidelines, 2025: RBI guidelines regarding norms for granting loans by banks against gold security collateral jewellery.
SHRI PANKAJ CHAUDHARY: The Minister of State for Finance who provided the answer to the question in the Lok Sabha.
Lok Sabha: The lower house of the Parliament of India, where the question was raised.
Loans against Gold Security: Loans provided by banks by keeping gold as security.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO. 73
Answered on Monday, July 21, 2025/ Ashadha 30, 1947 (Saka)
Loans against Gold Security
73. THIRU THANGA TAMILSELVAN:
DR. GANAPATHY RAJKUMAR P:
Will the Minister of Finance be pleased to state:
(a) whether the Government has received any letter from the Chief Minister of Tamil Nadu seeking a review of
the Reserve Bank of India’s (RBI) draft guidelines which imposed strict restrictions on the norms for granting
loans by banks against gold security/ collateral/ jewellery;
(b) if so, the details thereof and the response of the Government thereto;
(c) whether the Government has advised the RBI to reconsider the Lending against Gold Security Guidelines,
2025 and ease restrictions on the norms for granting loans against gold by continuing accepting gold as
collateral for agricultural and agriculture- related loans upto 2 lakhs;
(d) if so, the details thereof; and
(e) if not, the reasons therefor?
ANSWER
THE MINISTER OF STATE FOR FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) to (e): Yes. Government has received the letter from the Chief Minister of Tamil Nadu regarding draft
Directions on Lending Against Gold Collateral issued by Reserve Bank of India (RBI) on 9.4.2025 for public
comments.
RBI was requested to consider, inter alia, exclusion of small ticket borrowers, including farmers, from the then
proposed linkage of sanction amount with repayment capacity of borrower along with necessity of proof of
ownership/ relevant document.
RBI has since issued comprehensive Directions on Lending against Gold and Silver Collateral on 6.6.2025, taking
into consideration comments/ feedback received from various stakeholders, to create a principle-based harmonized
regulatory framework and to address prudential and conduct-related gaps across all regulated entities (REs) for
loans against gold and silver collateral.
Further, these directions apply to all loans offered by RE for the purpose of consumption or income generation
(including farm credit) where eligible gold or silver collateral is accepted as a collateral security.
The salient features of the Directions, inter alia, include:
(i)Detailed credit assessment, including assessment of borrower’s repayment capacity to be undertaken in
case the total loan amount is above ₹2.5 lakh to a borrower;
(ii)Maximum permissible Loan to value ratio not to exceed 85 per cent for maximum total consumption loan
amount of ₹2.5 lakh;
(iii)All communication with the borrower to be in the language of the region or in a language chosen by the
borrower; and
(iv)Renewal of bullet repayment loans on payment of accrued interest, if any.
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