MADURAI: The Madurai Bench of the Madras High Court recently issued notice to the union government, Reserve Bank of India (RBI), among others on a Public Interest Litigation (PIL) petition filed challenging a portion of the recent guidelines issued by the RBI, which mandates repayment of both principal amount and interest for renewal of jewel loans.
The litigant S Pitchairajan, secretary of TN Farmers Union, stated in his petition that earlier, banks used to allow annual renewal of gold loans, if the borrower pays the interest amount. However, due to clauses ix, x and xi mentioned in the annexure of a circular issued by the RBI on September 30, 2024, which observed certain irregularities in grant of gold loans by banks, Pitchairajan claimed the banks have now started demanding repayment of both the principal amount and the interest to renew gold loans.
As many people may find it difficult to arrange for the principal amount, they will lose their gold jewels which are the only tangible assets that comes to their aid for getting immediate cash during any financial crises, the litigant added. He further requested the court to quash the above clauses of the circular. A bench comprising Justices J Nisha Banu and S Srimathy issued notice and adjourned the case for two months.