Gold Loan Borrowers Get Big Budget Boost: Lower Rates, Easier Access

• Government considers granting Priority Sector Lending (PSL) status to gold loan NBFCs, reducing borrowing costs and enabling lower interest rates for small borrowers.
• Proposal for a UPI-based gold-linked credit line allows consumers to access revolving credit instantly via UPI apps using idle gold jewelry, offering cheaper credit than unsecured cards.
• Aligning exposure limits for gold loan NBFCs with standard 20% of Tier-1 capital would allow well-capitalized NBFCs to lend more efficiently, supporting growth.
• Simplifying TDS rules for listed Non-Convertible Debentures (NCDs) and offering higher interest rates to retail investors could boost funding for NBFCs and household savings.
• These measures aim to enhance financial inclusion, promote credit-led growth, and support households and small businesses, especially in semi-urban and rural areas.

Why It Matters: Budget proposals aim to make gold loans cheaper and more accessible, boosting financial inclusion and credit growth.