FinMin Urges RBI To Exclude Small Ticket Borrowers From New Gold Loan Rules; Muthoot Finance, Manappuram Rally

The Union Finance Ministry has urged the Reserve Bank of India to exclude small ticket borrowers of gold loans (for amounts less than Rs 2 lakh) from the upcoming RBI gold loan draft guidelines. The ministry has also recommended the implementation of new RBI gold loan rules from 1 January 2026. The update fuelled a rally in top gold loan-focused NBFC stocks like Manappuram Finance, Muthoot Finance, etc.

Shares of Mannapuram Finance, Muthoot Finance, etc, rallied to as high as 5% during Friday's intraday trading session. Manappuram Finance share price closed 2.67% higher at Rs 238 per share on BSE on Friday. Meanwhile, Muthoot Finance share price closed after surging nearly 6.49% to Rs 2200 per share on BSE today.

FinMin Recommendations to RBI On Gold Loan Draft Guidelines

Gold loan-focused NBFCs' share price rallied after the Union Finance Ministry on Friday announced the recommendations made to the RBI on the draft of gold loan guidelines. In April, the RBI had proposed tighter rules and regulations for monitoring and disbursement of gold loans, mostly by low-income borrowers.

Department of Financial Services has " given suggestions to the @RBI to ensure that the requirements of the small gold loan borrowers are not adversely affected. @DFS_India has also stated that such guidelines will need time to implement at the field level and hence may be suitable for implementation from 1st January 2026 only," read a social media post shared by the Ministry of Finance on Friday.

Exclude Small Ticket Borrowers from RBI Rules

The DFS has also urged the central bank to provide relief to small ticket borrowers, ie loan borrowers below Rs 2 lakh, for certain RBI draft guidelines. As per the Finance Ministry's social media post, small ticket borrowers may be excluded from the requirements of the proposed directions to ensure timely and speedy disbursement of loans.

RBI is currently reviewing the feedback provided by the Finance Ministry on the gold loan draft guidelines. The ministry has also expressed optimism that the RBI may consider the recommendations and will also ponder the feedback received from the public.

The Finance Ministry's statement came days after Tamil Nadu Chief Minister MK Stalin wrote to Union Finance Minister Nirmala Sitharaman. MK Stalin, in his letter, expressed concern about the RBI's draft regulations. The Reserve Bank of India announced the draft rules on gold loans after its Monetary Policy Committee (MPC) held in April this month. Later, the RBI's draft guidelines were made public on April 9.

RBI Draft Guidelines on Gold Loans

As per the proposed RBI guidelines for gold loans, lenders who deal in the segment need to ensure a "standardised procedure" to help determine the purity of gold collateral, its weight (gross as well as net), and other conditions and information. The proposed guidelines have made it important for all branches of the lenders to adopt the procedure.

Additionally, the lenders have to also make the standardised procedure to identify the purity of gold loans public, reported PTI.

"Lenders shall ensure presence of the borrower(s) while assaying the collateral at the time of sanctioning the loan. The deductions relating to stone weight, fastenings, etc., as part of the assay procedure shall be explained to the borrower(s) and details incorporated in the certificate to be issued," said RBI in the press release.