The Reserve Bank of India stated that the lending limits for gold loans under the bullet repayment program for urban cooperative banks would be doubled to Rs 4 lakh, on Friday.
“It has been decided to increase the existing limit for gold loans under the bullet repayment scheme from Rs 2 lakh to Rs 4 lakh in respect of Urban Cooperative Banks (UCBs) who have met the overall target and sub-targets under the Priority Sector Lending (PSL) as on March 31, 2023,” RBI Governor Shaktikanta Das said.
A bullet repayment scheme is one in which a borrower repays interest and principal at the conclusion of a loan term without having to worry about repayment during the loan term.
Das, who recently met with top executives from UCBs, stated that the measure is consistent with the RBI’s earlier announcement of providing “suitable incentives” to UCBs that have met the prescribed PSL targets, under which a lender is required to devote a portion of its overall lending to the marginalised sector.
Following the announcement of the bi-monthly policy review, Das stated that the RBI will issue a complete regulatory framework for project finance.
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“With a view to strengthen the extant regulatory framework governing project finance and to harmonise the instructions across all regulated entities, the extant prudential norms for projects under implementation have been reviewed,” he said, adding that detailed draft guidelines will be released for public comments.
