RBI doubled bullet repayment gold loan limits for urban co-op banks to Rs 4 lakh.
The doubling of lending limits for gold loans under the bullet repayment scheme for urban cooperative banks to Rs 4 lakh has been announced by the RBI.
The existing limit for gold loans under the bullet repayment scheme has been increased from Rs 2 lakh to Rs 4 lakh for Urban Cooperative Banks (UCBs), who have met the overall target and sub-targets under the Priority Sector Lending (PSL).
In 2007, RBI allowed bullet repayment of gold loans up to ₹1 lakh. This was increased in 2014 to ₹2 lakh and the repayment was limited to 12 months.
Under the bullet repayment scheme, the borrower repays interest and the principal amount at the end of a loan tenure without worrying about repayment during the loan tenure.
RBI governor also announced that non-bank lenders in the ‘middle and base layers’ will be permitted to use Credit Risk Mitigation instruments for reducing their counterparty exposure under the credit
