Jewellers Can Now Repay Part of Gold Loan in a Physical Loan

26 Jun

HOW DOES A GOLD LOAN WORK?

In a gold loan, the borrower applies for a gold loan by pledging his gold articles as collateral or security. The borrower gives these articles as a security, that, in case if the borrower will not be able to repay the loan, the money lender or the bank, which has granted the money, has all the rights to sell that gold takes the amount of money.

A gold loan works in the following steps: -

You need to visit the bank with the gold articles that you want to pledge.
The moneylender will check the purity and the value of the gold.
After checking the value of the gold, the price of the gold is decided.
Then, after deciding the market price of the gold, the amount of loan will be decided that the bank will grant you. It can go upto a maximum of 80% of the value of the gold that is pledged.

JEWELLERS CAN NOW REPAY PART OF GOLD LOAN IN PHYSICAL LOAN: -

The bank provides an option to the borrower to repay a part of the gold metal loan (GML) in physical gold.According to the instructions given by the Reserve Bank of India, the banks who are authorised to import the gold metal and the banks who are designated to participate in Gold Molestation Scheme 2015 can give the gold metal loan to the jewellery exporters or the domestic manufacturers of the gold jewellery. Earlier, the gold loan was allowed to be repaid in cash (Indian currency - rupees), equal to the value of the gold. But now the Reserve

Bank of India has made some changes which are as follows: -

The banks shall provide the option to repay a part of the gold metal loan in physical gold of one kg or more to the borrower.
The gold metal loan should have been extended out of the local sources. The RBI said that the repayment of the gold loan has to be done using the India Good Delivery Standards (IGDS).
The bank also added that the gold metal has to be delivered directly to the borrower.
Another condition that was laid down by the Reserve Bank of India for the replacement of the loan was that the agreement of the loan should consist of the details of the options that can be used by the borrower. The details of the acceptable standards and the manner in which the gold has to be delivered for the repayment of the gold metal loan

ADVANTAGES OF A GOLD LOAN: -

The following are the advantages of a gold loan which are boon for the borrower to obtain Gold Loan: -

Faster processing- A gold loan is a secured loan, and therefore, it includes minimal documentation and lenient eligibility criteria. A credit score is also not required for the approval of a gold loan. Therefore, the money lenders generally disburse the gold loan in a few hours. Axis Bank gold loan offers minimal documentation.
Lower interest rate- The interest rate on a gold loan is low compared to the other loans, such as a personal loan or a car loan. If you will attach another asset as security, then the interest rate can be lowered further. The interest rate can be calculated with a gold loan calculator.
No processing fee- Most of the banks do not charge a processing fee for the gold loan. If some of the banks or the money lenders charge a processing fee, it will be only 1-2% of the loan amount.
No foreclosure charges- There are no foreclosure charges on a gold loan. However, if a bank or a money lender asks for some, it will be only 1-2% of the loan amount.

No income proof needed- There is no need for any income proof when you are applying for a gold loan because you are