Overview

• The Reserve Bank of India recently proposed reducing the loan-to-value (LTV) ratio for gold loans from 80% to 75% and tightening documentation requirements.
• AIADMK leader Edappadi K. Palaniswami and AMMK chief T. T. V. Dhinakaran have formally appealed for the rollback or relaxation of these new norms.
• Palaniswami emphasized that over 80% of lower-income and middle-class borrowers, including farmers, rely on gold loans for emergency liquidity.
• Concerns have also been raised about the need for mandatory testing of gold coins from private jewellers before loans are approved.
• The RBI has not yet responded to the appeals, leaving borrowers uncertain about the future of these stricter regulations.