The industry body has requested that the new framework, scheduled to be implemented by April 1, 2026, be postponed by up to six months or until external conditions stabilise. The representation has been made to the RBI, the Finance Ministry, and the Department of Financial Services.
The revised guidelines are aimed at tightening regulatory oversight and encouraging responsible lending practices in the gold loan segment, which has seen steady growth in recent years.
AGLOC said it supports the regulatory intent but argued that current geopolitical conditions, particularly tensions in the Middle East, could disrupt energy supply chains, elevate inflation, and strain household and small business finances. These factors, it noted, may affect borrowers’ repayment capacity in the near term.
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According to the association, sectors linked to fuel, LPG, logistics, and agriculture are already facing cost pressures, leading to temporary mismatches in cash flows. It warned that a sudden implementation of stricter norms under such conditions could constrain access to formal credit, especially for lower- and middle-income borrowers who rely on gold loans for short-term liquidity.
Gold-backed loans often serve as a counter-cyclical financing tool, providing quick access to funds during periods of income volatility. They are widely used by small businesses and informal sector participants to manage working capital needs and sustain consumption.
AGLOC has suggested that a phased or calibrated rollout of the new rules could help balance regulatory objectives with the need to maintain credit flow to vulnerable segments.
The central bank has not publicly responded to the request.