Gold loans: RBI imposes unwanted rules

The Reserve Bank of India (RBI) has issued a new set of nine guidelines for banks and financial institutions to provide jewelry loans. The guidelines include submitting the proof of ownership of jewelry that is being pledge, and only 75% of the value of the jewelry will be provided, no permission to extend the loan by paying just the interest every year, and the collateral can be pledged only a day after the entire amount, including the principal and the interest, are paid off.
Until recently, gold jewels have been coming in handy for poor and middle-class families, small and marginal farmers, and small and micro entrepreneurs at the time of emergencies. Most of them will just pledge their jewels to get the money during an emergency. But the new guidelines have made things complicated for everyone.
The situation has become tricky especially when people try to pledge their ancestral jewels which have no receipt or proof of ownership. How can the Reserve Bank of India impose such a guideline without considering the basic facts?
Gold and jewelry loans were provided to make the entire process easy. RBI’s new guideline might push many out of the banking sphere, and it is highly unacceptable. What will happen if it refuses to cancel some of the guidelines?
People might simply resort to private pawn shops that might levy high interest and offer high principal amounts. Even if they fail to pay the interest for a single month, the penalty will be slapped, and the interest amount will multi-fold. This in turn will affect the economic advancement of those from economically disadvantaged backgrounds.
Only because of the low interest rate for gold loans in banks, it doesn’t come up for auction. If only the RBI had considered the fact that most of the gold jewelries that are pledged at pawn shops are never retrieved, they wouldn’t have imposed such a condition at all.   
Also, gold loans are the safest loans for banks, and it has recorded an annual growth of 23% in the last three years. The RBI has snatched away the rights to credit from middle-class families.
It is highly recommended to withdraw some of the guidelines imposed by the RBI for the public welfare. In addition to the RBI chairman and board of directors, finance minister Nirmala Sitharaman should also interfere to reverse the guidelines.
Will RBI’s action work in favour of common men?