RBI doubles gold loan limits for urban cooperative banks to ₹4 lakh
The Reserve Bank of India (RBI) has doubled the gold loan limits for urban cooperative banks (UCBs) under the bullet repayment scheme to ₹4 lakh from ₹2 lakh. This move is aimed at providing greater access to credit to small businesses and individuals, particularly during the festive season.
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The RBI’s decision comes in response to a request from the National Federation of Urban Cooperative Banks and Credit Societies (NAFCUB). The federation had sought an increase in the gold loan limit to ₹5 lakh, but the RBI has settled for a lower amount for now.
The bullet repayment scheme is a type of gold loan where the borrower repays the entire loan amount, including interest, in a single bullet payment at the end of the loan term. This type of loan is popular among small businesses and individuals who need quick access to cash.
The RBI’s decision to double the gold loan limit for UCBs is expected to boost the lending activity of these banks and help meet the credit needs of their customers. It is also likely to lead to a decrease in interest rates on gold loans, as UCBs will compete to attract more borrowers.
What does this mean for borrowers?
The RBI’s decision to double the gold loan limit for UCBs means that borrowers can now get a gold loan of up to ₹4 lakh from a UCB under the bullet repayment scheme. This is a significant increase from the previous limit of ₹2 lakh.
The higher loan limit will benefit small businesses and individuals who need to borrow more money. It will also make gold loans more affordable, as borrowers will have more options to choose from.
How to apply for a gold loan?
To apply for a gold loan, borrowers need to visit a UCB branch with their gold ornaments. The bank will appraise the gold and offer a loan amount based on the weight and purity of the gold.
Borrowers will also need to provide some personal and financial information, such as their name, address, income, and employment status. Once the loan is approved, borrowers will receive the loan amount in cash or as a bank transfer.
Repayment options
Gold loans are typically repaid in monthly installments. However, under the bullet repayment scheme, borrowers repay the entire loan amount, including interest, in a single bullet payment at the end of the loan term.
The loan term for gold loans typically ranges from 3 to 24 months. However, borrowers may be able to negotiate a longer loan term, depending on the bank’s policies.
Interest rates
The interest rates on gold loans vary from bank to bank. However, they are typically higher than interest rates on other types of loans, such as personal loans and car loans.
Borrowers should compare the interest rates offered by different banks before choosing a gold loan. They should also read the fine print carefully to understand the terms and conditions of the loan.