RBI/2014-15/395
DCBR.CO.BPD (RCB).Cir.No.11/13.05.001/2014-15

January 08, 2015

The Chief Executive Officer
All State / Central Cooperative Banks (StCBs/CCBs)

Madam / Dear Sir,

Gold Loan – Bullet Repayment

Please refer to circular RPCD.CO.RF.BC.No.60/07.37.02/2009-10 dated March 5, 2010 wherein StCBs/CCBs were permitted to grant gold loans up to Rs. 1.00 lakh with bullet repayment option.

2. On a review, it has been decided to increase the quantum of loan that could be granted under the scheme, from Rs. 1.00 lakh to Rs. 2.00 lakh subject to the following conditions:

1. The period of the loan shall not exceed 12 months from the date of sanction.

2. Interest will be charged to the account at monthly rests but will become due for payment along with principal only at the end of 12 months from the date of sanction.

3. StCBs/CCBs should maintain a Loan to Value (LTV) ratio of 75% on the outstanding amount of loan including the interest on an ongoing basis, failing which the loan will be treated as a Non Performing Asset (NPA).

4. The valuation of gold would be as per instructions contained in para 3 of the circular RPCD.RRB.RCB.BC.No.08/03.05.33/2014-15 dated July 1, 2014.

Yours faithfully,

(Suma Varma)
Principal Chief General Manager