Gold lenders lobby to see self-regulatory status, priority tag

The Association of Gold Loan Companies AGLOC (India) plans to start the process with 10 founding members, which are required under RBI regulations, and then add more members as it grows, said president George Alexander Muthoot, who is also the managing director of the country’s largest gold lender Muthoot Finance 

Ltd. “We will talk to RBI and start discussions.”

Kochi-based AGLOC (India) is a non-profit organization whose objectives, according to its website, include promoting and safeguarding the interests of gold loan financing companies and providing a common forum.

The association’s members plan to approach the regulator “as soon as possible” for the SRO status and also apply for a special status for gold loans, akin to priority sector loans, Muthoot told Mint, adding that non-bank gold loan financiers today account for around ₹3 trillion worth of cumulative assets.

“Gold loan is a big business today, so it needs separate treatment. All the rules and regulations for gold loans are different from the usual personal or vehicle loans etc,” Muthoot said. “We have been asking for a special status and will continue to ask the RBI.”

SROs, like the Association of Mutual Funds in India, are non-government agencies that set and enforce standards for a particular industry. The Finance Industry Development Council (FIDC), a representative body of non-bank financial companies (NBFCs) including several gold loan companies, also awaits RBI’s nod to be classified as an SRO.

The bids for SRO status come after the central bank issued the omnibus framework in March last year for recognizing SROs for regulated entities across loan and financial product categories and the nature of business. Fixed Income Money Market and Derivatives Association of India (FIMMDA) was the most recent entrant into the SRO category.

Special status

Umesh Mohanan, executive director and chief executive officer of gold and small business lender Indel Money, said the special status makes sense because only those in dire need of funds pledge gold of up to ₹50,000 and should be extended some benefit.

“We have always been vocal about thefact that at least gold loans of up to ₹50,000 should be given priority status, wherein…lower rates will be effective for the end customer.”

The RBI issued revised comprehensive norms for loans against gold and silver jewellery in June 2025, detailing easier norms for small-ticket loans. Aimed at improving access to formal credit for rural and semi-urban borrowers, the new rules exempted gold loans up to ₹2.5 lakh from credit appraisals, raised the LTV (loan-to-value) cap for small-ticket loans to 85% from 75%, and allowed borrowers to self-declare gold ownership in the absence of purchase invoices.

The norms sought to bring uniformity in gold lending across banks and NBFCs, and on various differentiated processes being followed by various lenders. Most industry experts have said that the new norms have brought clarity to gold lending processes, including on storage and auction processes, and should help further formalize the sector, bringing in operational efficiency and promoting growth.

A special status for gold loans has been a long-standing demand of gold financiers, given that such loans are termed as ‘short-term consumption loans’ but are completely secured and are issued against safe-haven gold as collateral.

“With majority of gold loan customers from rural and semi-urban areas being first-generation borrowers, recognizing gold loans under priority sector norms is critical,” said Manish Mayank, head of gold loan business at IIFL Finance. “It will expand credit access for the underbanked while enabling small entrepreneurs to access more formal, affordable and transparent financing.”