Finance Ministry Wants Relaxation in RBI’s New Gold Loan Rules

The Finance Ministry has requested the Reserve Bank of India (RBI) to ease some of the new rules proposed in April about gold loans. These rules were meant to tighten how gold loans are given and monitored, especially after a sharp rise in the number of such loans.

In a post on social media platform X, the Ministry’s Department of Financial Services said the new rules could make it harder for small borrowers—those who usually take gold loans under ₹2 lakh (around $2,344). These people often depend on gold loans to quickly get money during urgent times. The Ministry has asked the RBI to exempt these small borrowers from the stricter rules to ensure loans can still be given quickly and smoothly.

Gold loans are very popular in India, especially among low-income families and those who don’t have access to regular bank loans. These loans allow people to use their gold jewellery or coins as security to get money easily. According to RBI data, gold loans increased by about 30% between September 2024 and February 2025. Because of this spike, the RBI suggested stricter monitoring and loan processes.

To give banks and financial institutions more time to adjust, the Finance Ministry also suggested that the new rules be delayed until January 1, 2026. This would help banks and NBFCs train their staff and update their systems before the new rules come into effect.

The RBI had invited public feedback on the proposed rules up to mid-May, but hasn’t yet made a final decision.

After the Ministry’s announcement, the stock market reacted. Shares of gold loan companies responded positively—Muthoot Finance shares went up 4.9%, Manappuram Finance rose by 0.5%, while IIFL Finance saw a small drop of 0.6%.

This move by the Finance Ministry shows that the government is trying to find a balance between strong regulations and protecting the needs of small borrowers. While the RBI wants to make gold-backed lending safer and more transparent, the Finance Ministry wants to make sure that poor and middle-class people can still get access to money when they need it.

Everyone—from borrowers to lenders and investors—is now waiting to see what final rules the RBI will announce. These decisions will shape how gold loans work in India going forward.