Gold loan interest rate: On October 6, the Reserve Bank of India has increased the limit of gold loan given by Urban Cooperative Banks (UCBs) under the Bullet Repayment Scheme from Rs 2 lakh to Rs 4 lakh.
Gold loan interest rate: The Reserve Bank of India has doubled the loan against gold under the Bullet Repayment Scheme for urban co-operative banks to Rs 4 lakh. This limit has been extended for those urban cooperative banks which have completed all the targets under lending to the primary sector by March 31, 2023.
Bullet Repayment Plan allows borrowers to repay both the principal and interest on the loan in one lump sum at the end of the loan tenure. That means you can pay the interest and the entire money at once.
RBI first allowed bullet repayment of gold loans up to Rs 1 lakh in 2007. In 2014, the limit was doubled to Rs 2 lakh, limiting the repayment period to 12 months. Now double the gold loan i.e. Rs 4 lakh can be taken. Let us tell you that UCBs were demanding an increase in the loan limit to help small and marginal borrowers meet their funding requirements.
RBI has recently extended the deadline for UCBs to achieve the PSL target by two years to March 31, 2026.
Bullet repayment for urban co-operative banks (UCBs) that have completed sub-targets up to the overall target under Priority Sector Lending (PSL) by March 31, 2023, RBI Governor Shaktikanta Das said while announcing the bi-monthly monetary policy review. Under the scheme, it has been decided to increase the existing limit of gold loan from Rs 2 lakh to Rs 4 lakh.
What benefit will the public get?
First of all, understand that small businessmen will benefit greatly from this. Moreover, they will not have to face much paperwork. They will get the money immediately. Let us tell you that with the valuation of gold, most of the gold loans are approved and reach the customer’s account within a day.
Whereas, if someone takes a loan under the Bullet Repayment Scheme, he will be able to pay the principal amount and interest together at the end of the loan tenure. However, the interest on loan against gold will be calculated on a monthly basis during the entire period.
Das said, ‘This measure is in line with our previous announcement, in which it was said that UCBs that meet the priority sector lending targets set by March 31, 2023, will be given incentive.’
There was no change in the repo rate.
RBI on Friday kept the policy rate repo at 6.5 percent for the fourth consecutive time. This means that there will be no change in the monthly installment (EMI) on various loans including house, vehicle.
