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RBI doubles bullet repayment gold loan limits for urban co-op banks

October 09, 2023

RBI doubles bullet repayment gold loan limits for urban co-op banks
The Reserve Bank of India on Friday announced doubling the lending limits for gold loans under the bullet repayment scheme for urban cooperative banks to ₹4 lakh.

“It has been decided to increase the existing limit for gold loans under the bullet repayment scheme from ₹2 lakh to ₹4 lakh in respect of Urban Cooperative Banks (UCBs) who have met the overall target and sub-targets under the Priority Sector Lending (PSL) as on March 31, 2023,” RBI Governor Shaktikanta Das said. A bullet repayment scheme is one where a borrower repays interest and the principal amount at the end of a loan tenure without worrying about repayment during the loan tenure.
 
Das, who had a meeting with the top brass of UCBs recently, said the measure is in line with the RBI’s earlier announcement of providing “suitable incentives” to UCBs that have met the prescribed PSL targets, wherein a lender is mandated to devote a certain part of its overall lending for the marginalised sector. Later in the day, the RBI in a circular said, it has been decided to increase the monetary ceiling of gold loans that can be granted under the bullet repayment scheme, from to ₹4 lakh for those UCBs, who have met the overall Priority Sector Lending target and sub-targets as on March 31, 2023, and continue to meet the targets.
 
The limits prescribed for this are effective from the date of this circular, it said. Speaking after announcing the bi-monthly policy review, Das also announced that the RBI will be issuing a comprehensive regulatory framework on project finance.”With a view to strengthen the extant regulatory framework governing project finance and to harmonise the instructions across all regulated entities, the extant prudential norms for projects under implementation have been reviewed,” he said, adding that detailed draft guidelines will be released for public comments.
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