What changed
The monetary ceiling for gold loans under bullet repayment has been increased from ₹2 lakh to ₹4 lakh for UCBs that met PSL targets and sub-targets as of March 31, 2023, and maintain compliance. This change is effective from October 6, 2023, and all other conditions from earlier circulars remain unchanged.
What it means for you
Compliant UCBs can now offer larger gold loans with bullet repayment, potentially boosting their gold loan portfolio and customer appeal. Non-compliant UCBs miss out, reinforcing the importance of meeting PSL targets. Banks must ensure ongoing adherence to PSL norms to retain this benefit.
What you must do
- Verify if your UCB met overall PSL target and sub-targets as on March 31, 2023, and continues to meet them.
- Update internal gold loan policies to reflect the new ₹4 lakh limit for bullet repayment for eligible borrowers.
- Communicate the revised limit to branch staff and ensure compliance with all other conditions from circulars dated October 30, 2014, and June 8, 2023.
- Monitor PSL performance regularly to maintain eligibility for this and future incentives.
Who it affects
Primary Urban Co-operative Banks (UCBs) other than Salary Earners' Banks, Gold loan borrowers of eligible UCBs, RBI supervisory teams monitoring PSL compliance
Which UCBs are eligible for the increased gold loan limit?
Only those Primary Urban Co-operative Banks that met the overall Priority Sector Lending target and sub-targets as on March 31, 2023, and continue to meet them as per the June 8, 2023 circular.
Does this circular change any other conditions for gold loans?
No. All other provisions from the earlier circulars (dated October 30, 2014, and June 8, 2023) remain unchanged. Only the monetary ceiling for bullet repayment has been revised.
When does the new limit become effective?
The increased limit of ₹4 lakh is effective from the date of this circular, i.e., October 6, 2023.