RBI doubles gold loans limit to Rs 4L for UCBs under bullet scheme

The Reserve Bank of India (RBI) on Friday announced an increase in the monetary ceiling of gold loans that can be granted under the bullet repayment scheme from Rs 2 lakhs to Rs 4 lakhs for urban co-operative banks (UCB) who have met the overall PSL target and sub targets as on March 31, 2023.

These banks will be required to continue to meet the targets and sub-targets thereafter and detailed guidelines on the matter will be issued separately, according to an RBI statement. 

The central bank said the step has been taken with a view to incentivising UCBs that have met the prescribed PSL targets as on March 31, 2023.

UCBs have been permitted an extended glide path for achievement of PSL targets, beyond March 2023 and the new incentive is expected to accelerate the process.

UCBs had sought enhancement in the ceiling on loans against gold and gold jewellery from Rs 2 lakhs to Rs 5 lakhs under the bullet payment scheme to meet the funding requirements of small and marginal borrowers.

The RBI had permitted bullet repayment of gold loans up to Rs 1 lakh to start with in 2007, which was increased later to Rs 2 lakhs in 2014, with the repayment being restricted to 12 months. The scheme has now been further liberalised.