Karnataka State Sugarcane Growers’ Association President Kuruburu Shantkumar has urged the Reserve Bank of India to withdraw the norms that prescribe good CIBIL (Credit Information Bureau (India) Limited) score as a pre-requisite to obtain gold mortgage loan from banks.

A delegation of farmers led by Mr. Shanth Kumar met RBI top officials here on Thursday and submitted a memorandum to them in this regard besides explaining to them about the inconvenience caused to farmers through such norms.

Change since April 1

After meeting the RBI officials, Mr. Shanth Kumar told The Hindu that the RBI had changed the norms related to loans obtained by mortgaging gold loans with effect from April 1 this year.

“There was no need to have a good CIBIL score, that indicate creditworthiness, for obtaining gold loans so far as the mortgaged gold itself was a security against any defaulting. But since April 1 this year, you need to have a good CIBIL score even to get gold loan. This is anti-farmer as most of famers have made it a practice to take care of their short-term financial requirements through gold loans as they cannot get other loans easily due to their poor CIBIL scores,” he said.

“Farmers do not get regular monthly incomes and hence their CIBIL scores are bound to decline if they fail to pay up even one or two monthly installments. Due to such low CIBIL score, it is difficult for them to get other loans. Hence they would depend heavily on gold loans. But now it would be difficult for them to get even gold loans,” he observed, while expressing concern that such changes in the loan system would affect farm sector.

He alleged that such norms are bound to push farmers towards private money lenders and private gold loan operators who quickly offer loans if they mortgage gold, but later cheat with high interests.

He suspected that such changes may have been effected to turn the situation advantageous for the private financial institutions.

To petition FM

He said the farmers’ association would petition Union Finance Minister Nirmala Sitharaman in this regard, and declared that farmers would stage protests throughout the State if the new norms were not withdrawn and gold loan process was not simplified by banks.