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Mumbai, Nov. 26 Urban co-operative banks can now sanction gold loan not exceeding Rs 1 lakh with bullet repayment option, said a notification from the Reserve Bank of India.

The period of the loan should not exceed 12 months from the date of sanction and the interest would be charged to the account at monthly rests, however, it would become due for payment along with principal only at the end of 12 months from the date of sanction.

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 ornaments), expected price fluctuations, interest that will accrue during the tenure of the loan, said the notification.

The account would also be classified as Non-Performing Asset (sub standard category) even before the due date of repayment, if the prescribed margin is not maintained.

More Stories on : Credit Market | Gold & Silver | Co-operatives | RBI & Other Central Banks

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