RBI should roll back restrictions on gold loans: AIADMK leader Edappadi Palaniswami

Chennai: AIADMK general secretary Edappadi K Palaniswami on Friday urged the Reserve Bank of India to immediately roll back the new conditions imposed on jewellery mortgage loans as they would severely affect the poor and middle-class families dependent on such loans during emergencies.

He said over 80 per cent of the Indian population who hailed from the poor and middle-class sections, and even farmers and traders, mortgaged their jewels with the nearest cooperative or nationalised banks to raise money to meet emergencies.

"These sections would be severely affected due to the RBI's draft guidelines on prudential norms," Palaniswami said in a statement here.

Further, reducing the loan-to-value ratio to 75 per cent from the present 80 per cent and burdening borrowers with excessive documentation, among other things, would impact the borrower's ability to raise loans, he said.

"Hence, in the interest of the people, I urge the Reserve Bank of India to immediately withdraw these new conditions and also request it to check the quality of gold coins purchased from private jewellery shops before providing gold loans," Palaniswami added.