In a notification issued recently the RBI has spiked the limit for USCBs to give loans against gold from Rs. 1 lakh to Rs. 2 lakh.
These banks could grant loans under the bullet repayment scheme.
The RBI insists that the banks should follow a proper policy of lending such loans with the approval of their management boards.
The banks should also maintain LTV ratio of 75 percent on the outstanding amount and thus avoid NPA happening.