Tamil Nadu: Co-op gold loan cap hiked to Rs 10,000 per gram

CHENNAI: The State government on Monday raised the maximum loan available against gold jewellery through cooperative institutions to Rs 10,000 per gram from Rs 7,000, while taking steps to rationalise interest rates charged by different cooperative institutions.

The decision was taken at a meeting on jewel loans provided by various cooperative institutions functioning under the control of the Registrar of Cooperative Societies. Under the revised norms, the loan amount has been fixed at a maximum of Rs 10,000 per gram or 75 per cent of the market value of the jewellery.

The enhanced loan ceiling will apply to both fresh jewel loans and existing loans that are renewed, the government said. Earlier, loans were provided up to 75 per cent of the gold’s market value, subject to a maximum of Rs 7,000 per gram for loans with a six-month tenure. The maximum interest rate had been increased from 12 per cent to 13 per cent last year.

The government has also moved to address the disparity in interest rates between District Central Cooperative Banks (DCCBs) and Primary Agricultural Cooperative Credit Societies (PACCS). The interest rate DCCBs charge PACCS on jewel loans must be at least 1.25 percentage points lower than the rate charged on jewel loans through DCCB branches.

Further, the government has capped PACCS's margin at 2.25 per cent.