Current · Source: Reserve Bank of India · RBI/2013-14/419 · issued 30 Dec 2013 · ~2 min read
Quick answerRBI now permits bullet repayment for non-agriculture gold loans up to Rs 1 lakh, with a 12-month tenure. Interest accrues monthly but is due only at maturity. Loans become NPA if margin is breached, and interest income is recognised only on collection.
The rule, in the simplest words
You can give a gold loan up to Rs 1 lakh (100,000 rupees) for non-farming purposes, and the borrower can pay back everything (loan + interest) at the end of 12 months, not in monthly payments.
Interest is added to the account every month, but the borrower only pays it together with the loan amount at the end of the 12 months.
The bank must set a minimum margin (the difference between the gold's value and the loan amount). If the margin drops below that, the loan is immediately called a bad loan (NPA), even before the due date.
The bank can only count the interest as income when it is actually collected, not before.
The loan cannot be more than Rs 1 lakh at any time, and the loan period cannot be longer than 12 months.
How it plays out — a real example
A gold-loan officer in a rural branch in Tamil Nadu, Priya, approves a Rs 80,000 bullet repayment gold loan for a small shopkeeper. She sets a minimum margin of 25%, meaning the gold's value must stay at least 25% above the loan plus expected interest. She monitors the gold price weekly; if it falls and the margin is breached, she must immediately classify the account as a sub-standard NPA, even though the repayment is not due yet.
What changed
RBI allowed bullet repayment for non-agriculture gold loans up to Rs 1 lakh, replacing earlier amortising structures. Loans must not exceed Rs 1 lakh, tenure capped at 12 months, and interest is charged monthly but payable with principal at maturity. Banks must set a minimum margin; if margin is not maintained, the account is classified as sub-standard NPA even before due date.
What it means for you
Banks can now offer simpler gold loan products for small borrowers, reducing repayment burden until maturity. However, strict margin monitoring is critical—any breach triggers immediate NPA classification. Interest income can only be booked on actual collection, impacting profit recognition. This levels the playing field with non-bank lenders who already offered bullet repayment.
What you must do
Update loan policy to include bullet repayment option for non-agriculture gold loans up to Rs 1 lakh with 12-month tenure.
Set and monitor minimum margin requirements; fix loan limits considering gold value, price fluctuations, and accrued interest.
Ensure interest income is recognised in P&L only upon collection, not accrual.
Classify accounts as sub-standard NPA if prescribed margin is not maintained, even before repayment due date.
Train staff on revised asset classification and income recognition norms for these loans.
Who it affects
All scheduled commercial banks (excluding Local Area Banks and Regional Rural Banks), Retail lending teams handling gold loans, Credit risk and monitoring departments, Branch managers approving small-ticket gold loans
❓ Common questions
Can we offer bullet repayment for gold loans above Rs 1 lakh?
No, this facility is strictly limited to loans not exceeding Rs 1 lakh at any point of time. Larger loans must follow existing amortising structures.
When does the loan become NPA under this scheme?
The account is classified as sub-standard NPA even before the due date if the prescribed margin is not maintained. Additionally, standard NPA norms apply once principal or interest becomes overdue.
How should we recognise interest income on these bullet repayment loans?
Interest income must be recognised in the profit and loss account only on collection, not on an accrual basis. This is a key deviation from standard accrual accounting.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/419
DBOD.No.BP.79/21.04.048/2013-14
December 30, 2013
The Chairman and Managing Director/Chief Executive Officer
All Scheduled Commercial Banks
(Excluding Local Area Banks and Regional Rural Banks)
Dear Sir,
Non-Agriculture Loans against Gold Ornaments and Jewellery
In response to suggestions from banks and with a view to ensuring a level playing field among various market participants, it has been decided to permit bullet repayment of loans extended against pledge of gold ornaments and jewellery for other than agricultural purposes subject to the following guidelines:
(i) The amount of loan sanctioned should not exceed Rs 1.00 lakh at any point of time.
(ii) The period of the loan shall not exceed 12 months from the date of sanction.
(iii) Interest will be charged to the account at monthly rests but will become due for payment along with principal only at the maturity.
(iv) Banks 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 ornaments), expected price fluctuations, interest that will accrue during the tenure of the loan etc.
(v) The account would be classified as Non-Performing Asset (sub-standard category) even before the due date of repayment, if the prescribed margin is not maintained.
(vi) Banks shall recognise interest income on such loans in their profit and loss account only on collection.
(vii) Such loans shall also be governed by other extant norms pertaining to income recognition, asset classification and provisioning which shall be applicable once the principal and interest become overdue.
Yours faithfully,
(Chandan Sinha)
Principal Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/419 · issued 30 Dec 2013. The plain-English explanation above is BankPulse’s own independent summary.
Classify accounts as sub-standard NPA if prescribed margin is not maintained, even before repayment due date.
Train staff on revised asset classification and income recognition norms for these loans.
📜 Compliance
Update loan policy to include bullet repayment option for non-agriculture gold loans up to Rs 1 lakh with 12-month tenure.
Set and monitor minimum margin requirements; fix loan limits considering gold value, price fluctuations, and accrued interest.
Ensure interest income is recognised in P&L only upon collection, not accrual.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (All scheduled commercial banks (excluding Local Area Banks and Regional Rural Banks), Retail lending teams handling gold loans, Credit risk and monitoring departments, Branch managers approving small-ticket gold loans), your first concrete step on “Bullet Repayment for Gold Loans Up to Rs 1 Lakh” is: “Update loan policy to include bullet repayment option for non-agriculture gold loans up to Rs 1 lakh with 12-month tenure.” (RBI issued this 30 Dec 2013).
Circular: RBI/2013-14/419 -- Bullet Repayment for Gold Loans Up to Rs 1 Lakh
Issued: 30 Dec 2013
Action required: Update loan policy to include bullet repayment option for non-agriculture gold loans up to Rs 1 lakh with 12-month tenure.
Action required: Set and monitor minimum margin requirements; fix loan limits considering gold value, price fluctuations, and accrued interest.
Action required: Ensure interest income is recognised in P&L only upon collection, not accrual.
Action required: Classify accounts as sub-standard NPA if prescribed margin is not maintained, even before repayment due date.
Action required: Train staff on revised asset classification and income recognition norms for these loans.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8657&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
Help us keep this accurate
Found an inaccuracy or have an improvement? Tell us. Every report is reviewed by our team before any change is made — nothing goes live unverified.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
BANKPULSE · FREE DAILY BRIEF
Get RBI updates for your role
Every important RBI update, decoded in plain English — for your career, exams & financial awareness.
We collect only your email, name and role, used solely to send your brief — never sold or shared. Withdraw anytime via the unsubscribe link in any email. Independent platform, not affiliated with the RBI. Information, not legal advice.
REPORT AN ERROR · BETA
Spotted an error? Earn 500 BankPulse Credits
Help us stay accurate. If your correction is verified true and approved by our founder, you earn 500 BankPulse Credits — redeemable when the platform monetises.
Reviewed by a human before any credit is awarded. We never change the site from crowd input without verification.
WANT A NEW FEATURE · BETA
What would make BankPulse more useful for you?
Tell us what to build next — a tool, a data view, a role page, anything. We read every suggestion.
Thank you — your ideas directly shape what we build.