Do You Need Urgent Money?
You have the easiest option of converting your idle gold ornaments lying in the locker for years into cash. Leave aside your emotional inhibitions and look for getting liquid cash within a few hours. It doesn’t require voluminous paperwork for satisfying your Bank either. You can carry the old/out of fashion and out of use gold jewelery to the nearest Bank or Gold Financing Company for a quick Gold loan on easy terms in a few minutes.
Is there any Maximum limit?
Every NBFC/Bank has its own prescribed policy for fixing the maximum and minimum loan exposure it usually ranges from Rs.1000/-to Rs.50 lakh. for a single customer. Muthoot Finance the leading player in Gold Loans has no upper limit: https://www.muthootfinance.com
How Much Will It Cost?
Gold Loan is a secured loan offered on a very affordable low-interest rates ranging from 7% to 19% depending upon the amount of loan and its repayment period. You can repay the loan along with interest in 36 installments, being the maximum permissible time limit. SBI has a customer-friendly gold loan scheme: https://www.sbi.co.in/web/personal-banking/loans/gold-loan
What will be the maximum eligibility?
RBI has a fixed LTV(Loan to Value) ratio of 90% meaning thereby that Banks can finance loans to the extent of 90% of your gold value that is derived from the average 22ct. gold Jewelry price prevailing in the market over the last 30 days. Maximum eligibility of loan amount depends on the weight of your gold ornaments which is multiplied by the per gam rates of the gold. Normally, Banks come up with a per gram rate on regular basis. Let’s take an example :
Weight of Your jewelry: 150gm; Rate fixed by the bank: Rs.3100/ per gram
Total eligibility of loan: 3100×150=Rs.465000/-
Can Gold Coins/Gold Biscuits also be pledged?
Please note that the RBI has not allowed loans against gold bullion i.e gold bricks, gold biscuits, etc. Banks will accept only gold ornaments for extending loan facility
How and Where to Go?
Though a number of companies have started online gold financing business, I will recommend you to visit any branch of the authorized Bank/Company in your vicinity for availing of the loan facility. Muthoot Finance, Mannapuram, IIFL, HDFC Bank, ICICI Bank, Federal Bank, and a host of other NBFC’s extending this facility have hundreds of branches to cater to the needs of customers. You can google for the nearest branch
What is the standard procedure:
Generally, all Banks/NBFC’s have a uniform operating system in place as appended below:
- Carry documents, like, PAN Card, Aadhar Card, Passport, Bank account statement, and a canceled cheque for fulfilling the KYC norms.
- You need to deliver gold ornaments to the authorized representative/BM for verifying the purity and quality of the gold. They have a prescribed laid down procedures to carry out this process in a few minutes’ time.
- The ornaments are subjected to physical scrutiny and weight measurement in your presence. You will be briefed about the quality of gold and permissible loan amount with all terms of sanction.
- Different parameters define the schemes floated by the companies. With the maximum eligible amount, you will be charged the highest slab of interest rate but with a minimum amount of loan, you will be paying the lowest interest rates. However, You can take a call depending upon your requirements and ease of repayment.
- No complicated documentation!! It takes just a few minutes before the amount goes into your account
- Wait for the message on your mobile phone for the credit entry in your account but don’t forget to collect a copy of the sanction letter specifying all details of the pledged gold ornaments and terms of sanction.
What about the safety of the Jewelry:
All the Banks/NBFC’s have a robust security system taking care of the safety norms. The pledged ornaments are sealed and signed before finding their way into the vault. No one except an authorized representative has access to the strong room where all the ornaments are stored. There is virtually no chance of any pilferage or mixing up the packets.
When do the companies auction ornaments?.
- Your loan account needs to be adjusted by paying regular monthly installments. In case of any delinquency resulting due to non-payment of three installments, the account is treated as NPA(Non-Performing Asset) in compliance with RBI guidelines.
- You will be reminded of your liability through personal calls, notices, registered notices, and finally, the gold will be auctioned as per the policy.
Who auctions the gold ornaments?
Auction: Though not a pleasant experience for gold ornaments occupying a specific emotional value in the hearts of every Indian, the lenders exercise their option of auctioning the pledged securities after exhausting all available avenues as under:
You will be informed at least 21 days before the date of auction preferably by a registered post on the last available address in the company records. You still have an option to get your ornaments released by visiting the concerned branch of the company at least one day before the auction.
Notice of auction will be carried out in the two local newspapers. One of the newspapers may be in vernacular language in which you have signed the documents
The company will conduct auction through independent, professional and Board approved auctioneers only
The company can not participate in the auction process but an authorized representative of the company will remain present during the process of the auctioning.
A complete record like date, time, venue, details of sales, details of bidders present, maximum bid amount, details of the maximum amount bidder in whose name the bid has been concluded shall be prepared for all audits and future verification by the regulator i.e RBI
Auction price per gram shall be in line with the gold jewelry prices on the preceding day subject to the quality of the pledged gold
The borrower/customer can participate in the auction and place his bid like any other bidder on the same terms and conditions.
Any balance of this auction proceeds is utilized to settle mandatory taxes and auctioneer’s commissions. It is a mandate agreement to comply with the Sales Tax Laws of the state where the auction is conducted
After carrying out the auction, the company will inform the customer about the total amount auctioned along with any other relevant details. The surplus amount, if any, after payment of a prescribed fee to the auctioneers, local taxes, and any other related expenditure, will be credited into the account of the customer.
The auction process will be made transparent as per the guidelines of “The association of gold loan companies for public auction(India)” under the overall prescribed RBI policy on gold loans,
The Banks don’t insist for any declaration for end use of the loan amount sanctioned against the gold ornaments. You can use it for any purpose like investments, child education, payment of high cost debt, domestic ceremony or whatever you feel like. This is another simple way to repair your credit history.
Some of my friends from countries other than India might be surprised to find the entire post dedicated to the Indian conditions only. Yes, you are right! but believe me, all parameters are more or less the same in all the countries for availing gold loans by the customers. I can come back again on this topic if need be. Till then enjoy reading and keep me posted with your valuable feedbacks
https://www.muthootfinance.com
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