New mortgaging rules for jewellery loans will affect the poor

Poor people and farmers heavily rely on jewellery loans to meet their financial needs. Private companies charge high interest rates for such loans, making banks the preferred option for many borrowers. One major advantage of taking jewellery loans from banks is the flexible repayment rules, which allow borrowers to pay interest once a year.
However, the Reserve Bank of India has now introduced new guidelines with strict conditions for remortgaging jewellery loans, causing severe difficulties for the public. According to these new regulations, jewellery pledged in a bank can only be re-mortgaged the next day after full repayment of the loan amount. Borrowers can no longer re-mortgage their jewellery on the same day by paying just the interest. This has created a situation where borrowers must repay the entire loan amount before they can re-pledge their jewellery.
Additionally, the new rule that allows customers to redeem their jewellery only the day after repayment has caused great distress, especially for small farmers and traders who depend on jewellery loans for their livelihood. Previously, the option to re-mortgage jewellery by paying only the interest provided much-needed financial flexibility. Now, with the requirement to pay the entire principal amount, those relying on bank loans are being forced to seek alternative sources, often falling into the trap of high-interest moneylenders.
Given these challenges, it would be beneficial if the Union Finance Ministry intervened to withdraw the new guidelines and restore the old rules, ensuring that the public can continue to access jewellery loans without unnecessary hardship.