COIMBATORE: Farmers, MSME unit operators and consumers have opposed the RBI's new guidelines on availing gold loan from banks. They said that the new guidelines will force them to approach private money lenders, to obtain gold loans at high interest rate.
"The Union Ministry for Finance and the RBI have already suspended the jewellery loan scheme that farmers were getting at 4% interest. This has severely affected farmers. Following this, the system of renewing jewellery loans by paying only the interest due, was changed to cancellation of jewellery loans after paying the full amount and then, applying for a new loan again. This has put farmers and the general public in severe hardship," said Esan Murugasamy, founder of Tamilaga Vivasayigal Pathukappu Sangam.
"Now, in some additional guidelines issued recently, a receipt or proof of ownership of the jewellery has been made mandatory. Jewellery loans will not be given for gold coins, and only 75% of the value of the jewellery mortgaged will be given as loan. It is clear that these announcements were made to direct farmers and the middle-class towards private companies that offer gold and jewellery loans at higher interest rates," he added.
J James, President of Tamil Nadu Association of Cottage and Tiny Enterprises (TACT), said, "The new restriction will impact MSME unit operators, who depend on jewellery loans during financial need, to complete job orders within a specified time period. The operators, who used to take jewellery loans at an average interest of 9.75%, should now take loans from private entities, at an average interest rate of 22%."
CM Jayaraman, president of Citizens' Voice, Coimbatore, said, "The RBI's gold loan policy, disproportionately benefits large businesses while penalising small borrowers and investors, ultimately driving them to illegal lenders. The policy is ineffective in controlling gold prices and encourages GST evasions."