GK and monthly revision

Gold price fall triggers margin calls on bullet loans

A significant decline in gold prices has prompted margin calls on bullet loans, which are characterized by a single repayment at the end of the loan term. This situation arises due to a decrease in the value of pledged gold, influenced by geopolitical tensions and interest rate fluctuations. The Reserve Bank of India (RBI) has introduced new regulations aimed at enhancing the stability of gold-backed lending, especially as the market shifts towards EMI-based loans, reducing future risks for lenders.