Customers who had availed of gold loans upto Rs 1 lakh from regional rural banks (RRBs) have been allowed to make a one time repayment of the complete loan amount by Reserve Bank of India.
The central bank has told the RRBs to offer this facility which is called as bullet payment. In this, the borrower makes lump sum repayment of the full loan sum on its maturity instead of dividing the sum during the full duration of the loan.
An RBI notification said, “It has been decided to permit bullet repayment of gold loans up to Rs one lakh as an additional option. RRBs are, therefore, permitted to lay down policies with the approval of their board for sanction of gold loan with bullet repayment option…”.
But the policy would not be applicable to agriculture/crop loans which have used gold as collateral security. These loans would use the old repayment method only.
The notification said, “The bank should prescribe a minimum margin to be maintained in case of such loans and accordingly, fix the loan limit taking into account the market value of the security (gold/gold ornament), expected price fluctuations, interest that will accrue during the tenure of the loan, etc”.
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