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Economy, Schemes & Policies
Mahesh

10/10/23 04:39 AM IST

Bullet repayment scheme

In News
  • The Reserve Bank of India (RBI) recently announced an increase in the maximum limit for gold loans under the bullet repayment scheme from Rs 2 lakh to Rs 4 lakh, specifically for certain urban co-operative banks.
Bullet payment Scheme
  • Under the gold loan bullet repayment option, borrowers are required to repay the entire principal and interest amount at the conclusion of the loan tenure.
  • Unlike traditional loans with monthly EMI schedules, this option eliminates the need for periodic payments during the loan term.
  • However, it's important to note that the interest on the gold loan is calculated monthly throughout the tenure, and the borrower is obligated to make a single payment of the total principal and interest at the end of the loan term.
  • RBI permitted bullet repayment of gold loans up to ₹1 lakh to start with (in 2007), which was increased later (in 2014) to ₹2 lakh, with the repayment being restricted to 12 months.
  • UCBs are allowed to extend gold loans under the Bullet Repayment and Equated Monthly Instalment (EMI) Repayment routes for 12 months.
Source- PIB

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