Coimbatore : The Coimbatore Consumer Cause, a consumer organisation, has demanded discontinuation of the interest subvention scheme for gold loan.

Genuine agriculturists should be provided interest concession in other agriculture loans, it said.

As per an RBI directive earlier, there should be some documentary proof that the borrower was a bona fide agriculturist to get gold loan under agricultural finance with a concessional interest. With decontrol of the interest regime by the RBI, the instructions were diluted. “In our conservative estimate, around 90 per cent of gold loans under agricultural finance are availed of only by non-agriculturists for purpose other than agriculture,” said organisation secretary K Kathirmathiyon.

Many commercial banks were misusing the facility. The State Government of Tamil also had complained about this to the Reserve Bank of India. Banks sanctioned gold loan under agricultural finance up to a limit of Rs 1 lakh without any proof of it being used for agriculture purposes, he added.