Gold holds a very special place in India. It holds a lot of value in not only monetary terms but traditionally also. Historically, only the pawnbrokers and jewelers used to lend loans against gold. But they charged an exorbitant rate of interests which used to make it difficult for the borrower to repay the money. They generally used to lend loans against the gold jewelry reason being the emotional connection of borrowers with their jewelry.
Now, many financial institutions have started giving loans against gold at an attractive interest rate and easy documentation making it easier for the borrower.
A gold loan is a secured type of loan where the borrower pledges his/her gold with the lending institution (banks/NBFCs) as collateral and can get instant funds. The cash received can be used for any sort of purposes like investing in a startup, planning trips abroad, education fees, etc.as per the RBI the amount cannot be used in buying gold coins or jewelry or for any other speculative purposes.
There are many lending institutions in this business that provide loans at a very attractive ROI.
Some major gold loan providers in India are:-
- Muthoot Gold loan:- Muthoot finance offers many gold loan schemes to the borrower which they can choose as per the tenure and loan amount. It offers an interest rate ranging from 12%-26%. The minimum loan amount that can be availed by a customer is Rs. 1500 with no maximum limit. Partial repayment and prepayment option are also available without any penalty charges. The loan tenure for normal schemes is 7 days to 12 months whereas for EMI based scheme it is 7 days to 36 months.
- IIFL Gold loan:- IIFL is a well established financial service and offers a gold loan with interest rate starting at 9.24%-24%. It provides a loan on the gold with a purity of over 18 karats. The minimum loan amount that can be availed by a customer is Rs. 3000. The tenure varies from 3-11 months. It also provides the feature of releasing a part of gold by making part payments. Offers bullet repayment mode and does not charge a foreclosure fee if you close your account after 3 months.
- HDFC Gold loan:- it offers a gold loan by the name of ‘Sampoorna Bharosa Gold Loan’. Gives special offers and rates for existing bank account holders of the bank. HDFC charges just 1.5%+ GST as processing charges. Women are given special and preferential interest rates. The minimum loan amount offered is Rs. 10,000 in rural markets and Rs. 50,000 for others. The loan tenure ranges from 3 months to 24 months.
- ICICI Gold loan:- anyone within the age group of 18-70 years can avail the ICICI Bank gold loan provided the purity of gold jewelry is 18 karats and above. The customers are charged 1% of the loan amount as processing fees. The borrower needs to pay 6% per annum if he pays after the due date. It’s ROI ranges from 11%-19.76%. the minimum loan amount offered is Rs. 10,000 and maximum are Rs. 15 lacs.
- Canara Bank Gold loan:- this bank offers gold loans under their Swarna Gold Scheme against the security of gold ornaments. In addition to this, the borrower must have an account in the bank. ROI varies depending upon the loan amount. If the amount is up to 5 lacs the interest rate is 9.85% and if it is above 5 lacs then 9.95%.
- Axis Bank Gold loan:- anyone over the age of 18 years and below 75 years and owns gold ornaments can avail the joy of axis Bank gold loan. The purity of the gold ornament should be above 18 karats. It offers flexible repayment options and does not charge on part payment throughout the loan tenure. The borrower needs to pay just 1% of the loan amount as processing fees. The minimum loan amount starts from Rs. 25,001.
- SBI Gold loan:- SBI gold loans offers to anyone with a steady source of income. It also offers loans specifically for those who are engaged in agriculture activities. The minimum gold loan one can avail from SBI is Rs. 20,000 to maximum up to 20 lacs. The ROI charged is 9.15% and the tenure of the loan is 36 months.
There are many more lending institutions in this business. These are few which are on the major side of lending gold loans.