Andhra Pradesh State Cooperative Urban Banks and Credit Societies Federation have written a letter to the Chief General Manager of Reserve Bank of India for taking a decision for increasing the bullet payment limit of gold loans in respect of Urban Cooperative Banks.
The letter, which was signed by Chalasani Raghavendra Rao, its Secretary, reads, “RBI has fixed the limit of gold loans for bullet payments as 2 Lakhs in 2014 when the gold rate is around Rs 2000/- per gram. Now the gold rate has increased to around Rs 5500/- per gram, but the bullet payment limit has not been increased for UCBs”.
“Other Commercial banks are lending gold loans for any amount with the bullet payment. This discriminatory treatment is driving away business from UCBs to other commercial banks & NBFCs. Wherein the common people are being exploited by the NBFCs by charging huge interests”, he added.
It further reads, “This aspect is also brought to the notice of RBI during the 35th meeting of the Standing Advisory Committee convened by RBI on 6″ Jan 2023. RBI officials who were present in the meeting have assured us that they will look into the matter and do justice”.
In his letter, Rao also requested RBI to exempt priority sector housing loans from the regulatory threshold limit for real estate, commercial real estate and housing.
“RBI has imposed a regulatory threshold limit of 15% for the exposure to real estate, commercial real estate and housing sector. This limit includes the housing loans given under priority sector also. RBI, on one side is asking the UCBs to increase priority sector lending by enhancing the targets, but on the other putting a restriction of 15% threshold limit for lending to housing sector, including priority sector lending. Wherein the Governments are encouraging and propagating housing for every one”, Rao’s letter reads
He said, “Due to this reason UCBs are deprived of expanding the priority sector housing loans leading to shrinkage of priority sector lending”.
Rao also asked the RBI to examine issues related to achieving the prescribed targets by Urban Cooperative Banks under the Priority Sector Lending.