There has been an increase of 56% in gold loans in the first seven months of the current financial year i.e. 2024-25. Sectoral deployment data of bank credit released by the RBI on Friday shows that gold loans worth Rs 1,54,282 crore have been distributed till October 18, 2024.
A total loan of Rs 98.8 thousand crore was distributed in the first 7 months of the financial year 2023-24. In the last financial year, a total gold loan of Rs 1,02,562 crore was distributed by banks and NBFCs. This is 50% less than the loans distributed in the first 7 months of this financial year.
Personal loans have seen a growth of 5.6% on an annual basis. At the same time, an annual growth of 12.1% has been seen in the borrowing rate of banks. There will be an increase of 9.2% in credit card loans in the first 7 months of this financial year.
Rise in gold prices is the reason for increase in gold loans.
According to experts, the reason for this increase in gold loans could be the increase in gold prices. Apart from this, gold loan is available easily and at low interest. At the same time, some analysts also consider the increasing demand for gold loans as a sign of financial crisis.
Keep in mind before taking gold loan
It is important to consider several aspects before taking a gold loan. These include interest rate, loan-to-value ratio, processing fees and loan repayment terms. Above all, the security of your pledged gold is of utmost importance. In such a situation, you should choose a reputed lender (i.e. gold loan giving firm) who has a secure storage or locker facility or an insured vault.
- Gold loan is a secured loan. Pledge of gold reduces the financial risk of the lender.
- Processing of gold loan takes comparatively less time. It does not require much paperwork.
- As gold prices rise, your investment value may increase, making taking a gold loan a profitable deal.
For how long can you take a loan?
Generally you get 3 to 2 years to repay the loan. But it depends on the bank and NBFC. Like HDFC Bank gives loan for 3 months to two years. SBI gives for up to three years. Muthoot and Manapuram give loans for longer periods.
What is the maximum gold loan that can be taken?
Maximum you will get a loan of Rs 90 thousand against gold worth Rs 1 lakh. SBI gives gold loan up to Rs 50 lakh. They also give a loan of Rs 1500. Since these companies provide only gold loans, there is no maximum limit here.
Are any documents required for gold loan?
According to SBI website, you will have to provide PAN card, Aadhar and 2 passport sizes. Apart from this, proof of address will also have to be given.
Does it take into account your credit score?
Gold loan is a type of secured loan. That is why your credit score does not matter in this. You get this loan easily and at lower interest compared to personal loan.
How is the loan to be repaid?
Banks or NBFCs give you many options to repay the loan amount and interest, you can choose any of them as per your need. You can pay in equated monthly installments (EMIs). Apart from this you can pay the interest during the lump sum principal payment. This is called bullet repayment, and in this the banks charge interest on a monthly basis.
What will happen to your gold if you do not repay the loan?
If you are unable to repay the loan on time, the loan company has the right to sell your gold. Apart from this, if the price of gold falls, the lender may also ask you to pledge additional gold. Taking a gold loan is appropriate only when you need money for a short period of time. It would not be right not to use them for big expenses like buying a house.
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ATM like card for withdrawing PF, also considering increasing employee's contribution by 12%
The Central Government is preparing for major changes in the Employees Provident Fund Organization (EPFO). According to sources, according to the draft of EPFO 3.0, now consideration is going on to provide the facility to employees to withdraw PF funds directly from ATM.
It is believed that this facility can be started from June next year, but only a fixed amount can be withdrawn through it. This will mean that the employee will be able to withdraw money for emergencies, but even after retirement, sufficient amount will remain in the account.
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