With government hospitals recording an annual average of about 4.4 lakh deliveries, the scheme could potentially bring around 441 kg of gold into the market each year.

Officials said the higher lending limit was intended to encourage borrowers to approach cooperative institutions and reduce their dependence on private moneylenders and pawn brokers.

Previously, cooperative banks and societies offered loans equivalent to 75 per cent of the value of pledged jewellery, subject to a maximum of Rs 7,000 per gram. For loans repayable within six months, lending was permitted up to 75 per cent of the monthly average gold value without a per-gram ceiling.

The revised ceiling brings cooperative institutions closer to the amounts offered by other lenders.

Gold was priced at Rs 13,675 per gram on Monday. Private commercial banks offer approximately Rs 9,600 to Rs 10,400 per gram, while public sector banks lend about Rs 8,800 to Rs 9,300. Private pawn brokers, loan-focused non-banking financial companies, and trading companies offer roughly Rs 10,500 to Rs 11,000 per gram. Bank interest rates range from 14 to 18 per cent.

The cooperation department increased its gold loan interest rate from 12 to 13 per cent last year.

An official said the enhanced ceiling would encourage more customers to seek loans from cooperative banks, where they could obtain a larger amount against their pledged jewellery.

Separately, a meeting at the office of the Registrar of Cooperative Societies decided to cap the profit margin of Primary Agricultural Cooperative Credit Societies, or PACCS, at 2.25 per cent.

The meeting also stipulated that PACCS gold loans funded through cash credit from central cooperative banks should carry an interest rate 1.25 percentage points below the rate charged on gold loans issued directly by branches of those banks.

The decisions address both the amount available to borrowers against their jewellery and the pricing of loans routed through agricultural cooperative credit societies.