The scheme of gold loan is stated below with all its relevant features:
- Gold Overdraft Scheme – under this scheme individual can get finance from the bank by pledging their gold assets or gold ornaments. The scheme boasts if having attractive features which can be summarized below:
- The loan is available against the mortgage of gold ornaments or gold jewelry and can be out to any general use including any agriculture or related use.
- Any individual who is not a financier, jeweler or jewelry shop owner can avail of this loan provided that the individual is competent to enter into a legal contract and has gold for pledging
- The permissible amount of loan is Rs.1700 per gram of gold pledged or 75% of the market value of the gold pledged, whichever is lower.
- If the individual seeks to release his pledged gold articles, it will not be allowed. The articles would be released completely once the entire loan along with the interest has been repaid
- The minimum amount of loan granted under the scheme is Rs.25, 000 while the maximum limit is Rs.5 lakhs if the loan is taken for agricultural or related purposes and Rs.10 lakhs if the loan is taken for other purposes
- The loan is granted as an overdraft facility and the money can be withdrawn using an ATM card issued by the bank. However, one individual would be eligible to have only one gold overdraft account in his name
- The loan is granted for a period of 2 years and if needed it can be renewed after it expires
- Gold jewels and gold coins would be eligible to be pledged. However, there are two conditions which should be fulfilled in this regard. One, the gold pledged should not be re-pledged or pledged elsewhere and two, the value and the weight of nay precious stones embedded in the jewelry would not be regarded for the purpose of valuation.
- The rate of interest would depend on the amount taken and whether the gold is hallmarked or non-hallmarked and for the purpose the loan would be utilized.
Quantum of Loan and Purpose
Rate of Interest
Loans up to Rs.2 lakhs for agricultural purpose
Base Rate + 2.50% = 12.90%
Loans above Rs.2 lakhs for agricultural purpose
Base Rate + 3.25% = 13.65%
Loans up to Rs.2 lakhs against hallmarked gold for general purpose
Base Rate + 3.00% = 13.40%
Loans above Rs.2 lakhs against hallmarked gold for general purpose
Base Rate + 4% = 14.40%
Loans up to Rs.2 lakhs against non-hallmarked gold for general purpose
Base Rate + 3.25% = 13.65%
Loans above Rs.2 lakhs against non-hallmarked gold for general purpose
Base Rate + 4.25% = 14.65%
- The minimum actual interest which would be chargeable would be higher of Rs.90 for agricultural purposes and Rs.125 for general purposes or at least 15 days’ interest on the overdraft limit.
- A value of Rs.5 per thousand subject to a minimum of Rs.50 and a maximum of Rs.200 would be charged as the jeweler appraiser charges
- A free ATM card is offered with the gold overdraft account which can be used to withdraw money
- If there is any default in repaying the loan, the bank would charge a penal interest of 2% over the rate of interest applicable on the loan on the outstanding balance
- The loan has two types of charges which are to be paid. One is the processing charge which is 1% of the amount of loan sanctioned and the other one is the charge for working capital which is 0.50% of the amount of loan sanctioned.
- The documents which are required would depend on the existing agriculture jewel loan or ordinary jewel loan including the overdraft continuity letter.