RBI Gold Loan New Rule: RBI increases gold loan limit under Bullet Repayment Scheme, gold loan payment becomes more flexible

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The Reserve Bank of India (RBI) has increased the limit of gold loan under the Bullet Repayment Scheme in some urban co-operative banks (UCBs) from the existing limit of Rs 2 lakh to Rs 4 lakh.

The central bank said that urban co-operative banks which have met the overall target and sub-target under Primary Sector Lending (PSL) by March 31, 2023, are allowed to offer this option.

RBI said the decision to increase the monetary limit of gold loans has been taken to encourage UCBs to meet the PSL target set by March 31, 2023. For such, a rebate of Rs 2 lakh to Rs 4 lakh will be given under the Bullet Repayment Scheme. UCBs that have completed the overall PSL target and sub-targets by March 31, 2023. RBI said that these banks will have to continue to meet the targets and sub-targets thereafter. Detailed guidelines on this matter will be issued separately.

Announcing RBI’s monetary decisions, RBI Governor Shaktikanta Das said that this measure is in line with our previous announcement that appropriate incentives will be provided to urban co-operative banks that meet the priority sector lending target by March 31, 2023.

What is Gold Loan Bullet Repayment Option?

In the bullet repayment option, the borrower has to repay the entire principal and interest amount at the end of the loan tenure. Loan holders do not need to worry about following the EMI schedule or making partial payments during the entire tenure. Keep in mind that the gold loan interest rate will be calculated every month for the entire tenure, but the total principal and interest amount will be payable at the end of the tenure in a single payment.

Because the borrower repays the loan all at once, this type of repayment is known as a bullet repayment plan. Loan holders do not have to pay regular monthly EMIs. Hence they get more time and flexibility to repay the loan.

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