When it comes to borrowing from a financial institution, other than availing a personal loan, one can also opt for a gold loan. If you are planning on taking a gold loan (or a loan against gold), here is what you need to know.
What is a gold loan?
A gold loan is a loan against gold. It is a secured loan where gold articles such as gold jewellery, ornaments etc. are taken as collateral by the lending bank/NBFC. The loan is given to the borrower against this gold as collateral.
Apart from banks such as SBI, ICICI Bank, HDFC Bank etc., non-banking finance companies (NBFCs) also offer gold loans to individuals. NBFCs which offer gold loans include Muthoot Finance, Manappuram Finance etc.
Minimum and maximum gold loan amount
The amount of loan that an individual can get against a gold article will vary from lender to lender. For instance, ICICI Bank offers gold loans between Rs 10,000 and Rs 1 crore. Whereas the State Bank of India (SBI) offers gold loans between Rs 20,000 and Rs 20 lakh. While, Muthoot Finance offers gold loans starting from a minimum amount of Rs 1,500 with no maximum limit.
Tenure of gold loan
The tenure of the gold loan will also vary from lender to lender. For instance, HDFC Bank offers gold loans with tenures between three months and 24 months. Maximum period of repayment of an SBI gold loan is 36 months. Muthoot Finance offers different types of gold loan schemes that come with different tenures.
Interest rate on gold loan charged by bank and NBFC
|Bank / NBFC||Gold Loan Interest Rate||Processing Fee|
|SBI||7.00% to 7.50%||0.50% + GST|
|Bank of India||7.40%||Rs.125 to Rs. 300 per lakh|
|Canara Bank||1 Year MCLR (7.65%)|
|Bank of Maharashtra||7.35%||Rs.500/- exclusive of GST.|
|Indian Bank||7 % Floating|
|Lakshmi Vilas Bank||8.80%|
|Punjab National Bank||RLLR + 1.95%||0.75% of loan amount|
|Central Bank of India||MCLR + 0.50% to MCLR + 2.00%||NIL|
|Punjab & Sind Bank||7.50%|
|Federal Bank||8.50% onwards|
|United Bank||1 Year MCLR (9.35%)|
|Dhanlaxmi Bank||Starting 9.65% (Fixed)|
|J & K Bank||One Year MCLR + Spread = 10.00% p.a|
|Karur Vysya Bank||10.10%|
|Indusind Bank||10.5% to 16%||Processing Fee - 1%|
|Kotak Mahindra Bank||10% to 17%||Upto 2%|
|HDFC Bank||9.50% to 17.55%||1.50% + GST|
|Bandhan Bank||10.99% to 18.00%||1% + GST|
|ICICI Bank||10% to 19.76%||1% of loan amount|
|South Indian Bank||1 Year MCLR + 3.65 %|
|Muthoot Finance||24% to 26%|
|Axis Bank||13.00%||1% + GST|
|AU Small Finance Bank||Up to 24%||1% of loan amount|
|Manappuram Finance||Max 29%|
|City Union Bank||1 Year MCLR (14.25%)|
|Union Bank||MCLR+1.40% to MCLR+ 2.40%|
|Bank of Baroda||1 year MCLR+S.P+0.50%||0.50% + GST|
|Karnataka Bank||As per MCLR guidelines.|
Interest rate on gold loan sorted based on increasing order of maximum interest rate charged by bank/NBFC
Interest rate data as on Jan 14, 2021
What are the documents required?
To avail a gold loan, the bank or NBFC will ask you to provide various documents. Documents normally required include your proof of identity such as PAN, Aadhaar etc. and proof of address like Aadhaar, passport, Voter-ID card etc, and your photograph. Any additional documents required would vary from lender to lender.
What are the charges?
For loans like home, auto and personal loans, the borrower is usually required to pay processing charges/fees to avail the loan. While taking a gold loan, apart from processing fees, an applicant may be asked to pay for valuation of gold which will be used as collateral by the lending institution. For instance, HDFC Bank charges Rs 250 as valuation fees for loan up to Rs 1.5 lakh and Rs 500 for loan over Rs 1.5 lakh.
Apart from processing fees and valuation charges, a bank can also charge documentation and foreclosure charges.
Therefore, you should check with the bank and/or NBFC for all the charges that will be levied before availing the loan.
Disclaimer: The data/information given above is subject to change, hence before taking any decision based on it, please check terms and conditions with the bank/institution concerned.
For any queries or changes, please write to us on email@example.com or call us at 022 - 66353963
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3 Comments on this Story
Sreeraj R164 days ago
Even though the article provides data about gold loan facility given by many banks and nbfcs, writer is trying to focus mainly on some private companies and i feels like it is a paid news. Just look at the table and read the news afterwards.
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Abhay Sandwar165 days ago
Attraction given to general public .Why not such places to be pursued where Gold in abundance available .and some can be parted with without any difficulty .Of course , people in crisis opt to give their gold and get loan .Muthutut Finance is primarily well known .Now others Bank too have come in the fields with various option .