SBI Gold Loan

• The existing customers of the SBI bank can avail this loan and it is not sold to anybody else.
• Loan can be availed for a maximum amount of Rs.20 lakhs. The minimum amount of loan which can be availed is Rs.10,000 in rural and semi-urban areas and Rs.20,000 for metros and urban areas. So the applicant can borrow any amount of the loan as per his requirement as long he stays within the specified minimum and the maximum limits of the loan
• Gold ornaments or jewelry are to be pledged to the bank for availing the loan. Gold coins issued by SBI can also be pledged to avail a loan under this scheme
• The process of sanctioning the loan and disbursing of the amount is fast and simple. Very simple documents which are easily available with the individual are asked to be submitted and once submitted, the loan is issued instantly
• The rate of interest charged on the loan is low which can suit the pockets of the borrowers when they are making the payment of the loan instalment
• The bank maintains a margin of 25% of the value of the gold. Thus, the applicant ends up receiving 75% of the value of his gold pledged with the bank while the remaining 25% is retained by the bank as margin.
• The maximum tenure for repaying the loan instalments is 30 months for demand loan and 36 months for overdraft. The instalment payment would commence one month post the date the disbursement of the loan is made and would be required to be paid off within the stipulated tenure. The individual may choose a lower tenure of repayment like 1 or 2 years but the period or repayment cannot exceed 2.5 years and the loan has to be repaid within 30 months or 36 months depending on loan type
• The security required for availing the loan is the gold ornaments including gold coins which are issued by the bank

Interest Rate	2% + 1yr. MCLR = 11.05%
Minimum Loan Amount	Rs. 20,000
Max. Loan Amount	Rs. 20 Lakhs
Gold Loan Margin	25%
Maximum Repayment Tenure	30 months (36 months for overdraft)
Processing Fees Hallmarked Jewellery/Special Bank Gold Coins	0.50% of loan sanctioned + ST
Processing Fees of non-hallmarked ornaments	For Loan amounts not exceeding Rs. 25000 – Rs. 250 + ST For Loans amounts > Rs. 25000 – higher among  0.5% of loan amount sanctioned + ST or Rs. 500 + ST

*The above table is indicative and subject to periodic revision.

Currently the bank charges a rate of interest on gold loan which is 2.00% above the 12 months MCLR. The MCLR is currently 9.15% per annum making the interest rate chargeable on gold loan equal to 11.15% per annum.

The following documents are required while applying for a Gold Loan.

• Application Form for Gold Loans which should be duly filled up by the applicant
• Two copies of Photographs of the borrower
• Proof of Identity of the borrower PAN Card or Aadhar Card Copy
• Proof of Address of the Borrower

Eligibility Criteria:

• The applicant must be above 21 years of age at the time of applying for the loan. So anyone who is aged 21 years and above can easily avail the loan if he or she matches the other mandated criterion.
• Anyone with a steady source of income can avail the loan which also includes bank employees and Pensioners.

Using the Gold Loan EMI calculator facility, an individual, if he desires, can check the tentative amount he is required to pay as installment for his gold loan. The calculator calculates the corresponding EMI against the value of the loan sought and the repayment term chosen by the customer. This makes the borrower aware of his instalment outgo which he can adjust as per his affordability. Below are some instances of the instalments calculated using the calculator:

• Mr. A has a business financing requirement equaling Rs.2.5 lakhs for which he seeks a loan. He decides to utilize the idle gold jewelry of his wife as a pledge for availing a gold loan from the bank.He chooses a repayment period of 12 months for which the bank charges his an interest of 12.50% per annum on the outstanding balance of the loan. His corresponding EMI amounts to Rs.22,270 approximately with a total interest amount payable equaling Rs.17,249 for the entire tenure.
• Mr. B, a small time businesswoman working out of her home, faces a cash requirement of Rs.5 lakhs for meeting a large order received by her. She decides on a gold loan pledging her gold ornaments in the process.She chooses the repayment tenure of 18 months for the amount of loan she requires and the bank charges her an EMI of Rs.30,608. Within these 18 months, she completes the loan repayment paying a total of Rs.50,931 in interest.
• Mr. C requires working capital for his paper mill business. His requirement is Rs.10 lakhs and he has sufficient gold assets which can be pledged for availing the loan.He chooses the term of 20 months for repayment as he feels he would be able to afford the EMI relevant to such a long tenure. The bank accepts his application and grants him the required loan charging him an EMI of Rs.55648 in the process. Mr. C chose the maximum allowable tenure beyond which repayment is not allowed. For his total loan, he paid a total interest of Rs.112,962 to the bank.

The following table tabulates the above instances for a clearer understanding:

Applicant	Loan Amount	Interest Rate	Term	EMI	Total Interest Payable
Mr. A	2.5 lakhs	12.5%	12 months	22, 270	17,249
Mr. B	5 lakhs	12.5%	18 months	30, 608	50,931
Mr. C	10 lakhs	12.5%	20 months	55, 648	112,962