Overview

• Chief Minister MK Stalin has written to Finance Minister Nirmala Sitharaman urging her to advise the RBI to reconsider draft guidelines that would bar gold as collateral for agricultural loans up to ₹2 lakh and lower permissible loan-to-value ratios.
• The RBI’s draft “Lending against Gold Collateral Directions, 2025” proposes tightening documentation, integrating gold lending into banks’ risk frameworks and introducing single-borrower and sectoral exposure limits.
• Tamil Nadu warns that the restrictions could disrupt seasonal credit flows for sowing and harvesting, undermining banks’ ability to meet priority sector lending targets in agriculture.
• State officials contend that small and marginal farmers lacking formal land titles or income proof would be excluded from formal credit, driving them toward high-interest informal lenders.
• As of May 29, the RBI has not responded to Tamil Nadu’s appeal, leaving the draft guidelines’ fate and the outlook for rural credit delivery in limbo.