One time repayment allowed on gold loans from RRBs
By Vaibhav Aggarwal
Sep 23, 2010
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Customers who had taken gold loans upto Rs 1 lakh from regional rural banks (RRBs) have been permitted to make a one time repayment of the entire loan amount by Reserve Bank of India.

The apex bank has directed the RRBs to make space for this facility which is termed as bullet payment. According to this, the borrower makes lump sum repayment of the entire loan amount on its maturirty instead of breaking up the amount during the entire tenor of the loan.

"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..." the RBI said in a notification.

However, the policy would not cover agriculture/crop loans which have been taken by keeping gold as collateral security. Such loans would continue the old repayment procedure only.

"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," the notification added.


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