The Reserve Bank of India (RBI) has raised the ceiling on loans granted by state and district co-operative banks for various purposes against the security of gold/gold ornaments to Rs1 lakh.
As per RBI's existing instructions, banks can charge interest at monthly rests on such loans and advances granted for purposes other than agricultural and allied activities.
"On a review, it has been decided to permit bullet repayment of gold loans up to Rs1 lakh as an additional option," RBI said in a web site release.
State and central co-operative banks are allowed to lay down policies with the approval of their board for sanction of gold loan with bullet repayment option subject to the following guidelines:
* The amount of gold loan sanctioned should not exceed Rs1 lakh at any point of time.
* The period of loan should not exceed 12 months from the date of sanction.