Increase of Gold Loan Quantum for Gold Loan with Bullet Repayment by Co-operative Banks

Please refer to cir­cu­lar UBD. PCB. Cir.No.22/13.05.000/07–08 dat­ed Novem­ber 26, 2007, where­in Urban Coop­er­a­tive Banks (UCBs) were per­mit­ted to grant gold loans up to Rs. 1.00 lakh with bul­let repay­ment option.

2. Based on the rep­re­sen­ta­tions received from UCBs and National/State Fed­er­a­tions, it has been decid­ed to increase the quan­tum of loan that could be grant­ed under the scheme, from ‘ 1.00 lakh to Rs. 2.00 lakh sub­ject to the fol­low­ing conditions: 
3. The peri­od of the loan shall not exceed 12 months from the date of sanction.
4. Inter­est will be charged to the account at month­ly rests but will become due for pay­ment along with prin­ci­pal only at the end of 12 months from the date of sanction.

iii. Banks should main­tain a Loan to Val­ue (LTV) ratio of 75 % on the out­stand­ing amount of loan includ­ing the inter­est on an ongo­ing basis, fail­ing which the loan will be treat­ed as a Non per­form­ing Asset (NPA).

iv. The val­u­a­tion of gold would be as per instruc­tions con­tained in para 3 of the cir­cu­lar UBD.CO.BPD.PCB.Cir.No.60/13.05.001/2013–14 dat­ed May 9, 2014.

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