RBI hikes gold loan limit under bullet repayment scheme for urban cooperative banks

The Reserve Bank of India (RBI) has raised the gold loan limit under the bullet repayment scheme to ₹4 lakh ($5,352) for urban cooperative banks that have consistently met their Priority Sector Lending (PSL) targets. The announcement was made on Friday by RBI Governor Shaktikanta Das, who highlighted this move as a reward for these banks’ performance.

The bullet repayment scheme differs from traditional loans in that it requires a single payment of the total principal and interest at the term’s end. This policy adjustment is aimed at incentivizing urban cooperative banks that have consistently achieved their lending targets.

Further guidelines detailing this change are expected to be issued separately by the RBI, offering more clarity on this policy adjustment. The specific date for these detailed guidelines has not been disclosed yet.

This new policy comes as part of a series of measures taken by the RBI to encourage banks to meet their PSL targets, which are integral to the central bank’s strategy for ensuring financial inclusion and equitable distribution of credit across diverse sectors of the economy.

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