Member of Parliament Villupuram D. Ravikumar urged the Minister of Finance of the Union of Nirmal Sitharaman to give all banks instructions to provide loans without collateral up to 2 lakhs to farmers, in strict adherence to the instructions of the Indian reserve (RBI).
In the letter of Mrs. Sitharaman, the deputy stated that the Ministry of Finance recommended that loans below 2 lakh be exempt from recent RBI instructions concerning Gold Loan loans and the proposed standards only come from January 1, 2026 to ensure smooth implementation.
“Currently, several planned commercial banks are expanding loans to farmers against the golden collateral and categorizing these loans within agricultural finances. This practice directly in violation of the RBI directive,” Ravikumar said.
However, banks continue to demand gold as collateral and incorrect classification of such loans in agricultural finances not only RBI instructions, but also deceived farmers. This practice seriously affects small and marginal farmers who do not have gold and forces them to turn to private financies under unfavorable conditions.
The Ministry of Finance should therefore issue clear instructions to all banks to provide loans without collateral up to 2 laches 2 lakh, in compliance with RBI instructions. Banks should also be instructed to delay the distortion of loans supported by gold as agricultural financing, the deputy added.
Published – 6 June 2025 9:35
