Mumbai, Jan 9 (KNN)  Reserve Bank of India has allowed state and central cooperative banks (StCBs/CCBs) to double to Rs two lakh the amount of loan under the Gold Loan Bullet Repayment Scheme.

In a notification on Thursday, the apex bank said, “…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....”

However, the country’s central bank has stipulated certain conditions.  “The period of the loan shall not exceed 12 months from the date of sanction.  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,” it said.

In addition, “StCBs/CCBs should maintain a Loan to Value (LTV) ratio of 75 per cent 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),” it added.

As far as the valuation of gold is concerned, it would be done as per instructions issued earlier in July 2014.

Against the security of gold and gold ornaments, StCBs/CCBs have been granting loans to individuals for various purposes.  (KNN/ES)