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Gold Loans in India

Updated on November 30, 2022 , 19763 views

Since the beginning, Indians have a strong affinity towards gold. Also, as per historical data, gold has proved to be the best hedge against Inflation. India imports 25%-30% of gold production. Many banks and institutions offer gold loans with effective interest rates. In this article, you'll understand the important aspects of gold loan, top banks Offering gold loans, eligibility and procedure to apply for gold loan.

Gold Loan

Top Banks for Gold Loan in India 2022

Here is the list of top banks and financial institutions offering gold loans in India.

Below is the tabular form that gives details about a gold loan with the loan amount, interest rate and tenure.

Lenders Interest Rate Loan Amount Tenure
Mannapuram Gold Loan Up to 28%p.a Rs. 1,000 to Rs. 1.5 cr 3 months onwards
SBI Gold Loan 7.30% p.a onwards Rs. 20,000 to Rs. 50 lakh Up to 3 years
HDFC Gold Loan 12.04% p.a onwards Starting Rs. 25,000 onwards (Rs. 10,000 for rural areas) 6 months to 4 years
Axis Gold Loan 13.50% p.a.to 14.50% p.a. Rs. 25,001 to Rs. 20 lakh 6 months to 3 years
ICICI Gold Loan 11% p.a onwards Rs. 10,000 to Rs. 10 lakh Up to 6 months to 1 year
Canara Gold Loan 11.95% p.a onwards Rs. 10,000 to Rs. 35 lakh Up to 1 year
Bank of Baroda Gold Loan 11.65% p.a onwards Up to Rs. 25 lakh Up to 1 year
Karnataka Bank Gold Loan 10.65%p.a onwards Up to 5 lakh per account Up to 1 year
PNB Gold Loan 10.05% to 11.05% p.a Productive purpose: No limit, Non-productive purpose: Up to Rs. 10 lakh As per the lender’s terms and conditions
India Infoline 6.48% - 27% p.a Rs. 3000 onwards 3 to 11 months
Kotak Mahindra Gold Loan 8% to 17% p.a. Rs. 25000 to Rs. 1,50,00,000 3 months to 3 years
Federal Bank 6.99% p.a onwards Up to Rs. 40 Lacs As per the lender’s terms and conditions
Central Bank of India 10.65% p.a onwards (Floating Interest Rate) Up to 50 grams of gold can be committed as a security Up to 12 Months
Union Bank 9.90% Rs. 20 lakh priority sector, Rs. 10 lakh non-priority sector Customised
Muthoot Finance Gold Loan 12% to 27% Rs. 1500 to no maximum limit 7 day to 3 years
Kerala Gold Loan 8.90% to 12.10% Maximum loan amount up to 80% of appraised value of gold can be availed. Customised

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Best Banks for Gold Loan in India

1. Mannappuram Gold Loan

  • It offers an interest rate of up to 28% p.a.
  • You can avail a loan amount of Rs. 1,000 to Rs. 1.5 crore.
  • The tenure period of this institution starts from 3 months.

2. SBI Gold Loan

  • SBI offers a gold loan with an interest rate starting from 7.30% p.a.
  • Borrowers can avail a loan amount of Rs. 20,000 to Rs. 50,00,000.
  • The tenure period of the SBI gold loan is up to 3 years.

3. HDFC Gold Loan

  • HDFC offers gold loans starting at 12.04% interest rate per annum.
  • You can take the loan starting from Rs. 25,000.
  • The tenure period of the HDFC gold loan starts from 6 months and goes up to 4 years.

4. ICICI Gold Loan

  • ICICI offers a gold loan with an interest rate starting from 11% p.a.
  • You can avail a loan between Rs. 10,000 to Rs. 10,00,000.
  • The tenure period of this loan falls between 6 months to 1 year.

5. Axis Gold Loan

  • Axis gold loan attracts 15% to 17.5% interest rate per annum.
  • Borrowers can avail a gold loan amount of a minimum Rs 25,000 to a maximum of Rs 20,00,000.
  • The tenure of Axis gold loan is between 6 months to 3 years.

6. Union Bank Gold Loan

  • The Union Bank offers a gold loan with an interest rate of 9.90% p.a.
  • The maximum gold loan amount you can avail is Rs. 20 lakh for the priority sector and Rs. 10 lakh for non-priority sector.
  • The gold loan tenure is customised.

7. Muthoot Finance Gold Loan

  • Muthoot finance gold loan interest rate starts from 12.00% to 27.00% p.a.
  • You can avail gold loan starting from Rs. 1500, and there is no maximum amount limit.
  • The gold loan tenure ranges from 7 days to 3 years.

8. Kerala Gold Loan

  • Kerala gold loan offers interest rate of 8.90% to 12.10% p.a.
  • You can avail the maximum loan amount up to 80% of the appraised value of gold.
  • The tenure of the Kerala gold loan is customised

Features of Gold Loan

  • An individual can avail a gold loan for various needs such as educational purpose, vacation, medical emergencies, and so on.

  • Gold itself acts as Collateral against the loan.

  • Ideally, the loan tenure falls between 3 months to 3 years. But again, it may vary bank to bank.

  • Processing fees, late payment charges/fine for non-payment of the interest are some of the terms applicable for gold loan. So ensure you know all the terms of the loan before applying.

  • There are mainly three options where the lender can offer the customer for repaying the gold loan. They are-

    • Repayment in equated monthly instalments (EMIs).
    • Some lenders let the customers pay only the interest amount each month and the principal amount at the end of the loan tenure.
    • Paying the entire interest on a monthly Basis and then the principal amount at the end of the loan tenure.

Sometimes the option of discount is offered by the lenders at the prevailing interest rate on the gold loan. This is if the customer repays the interest on time, then 1% -2% discount might be offered from the original rate of interest.

How to Apply for a Gold Loan?

Individuals can apply for the gold loan through an online /offline mode. For the online process, one has to visit the lender’s website and apply, thereby filling the form with mandatory documents.

You can also visit the nearest institution or branch of the lender. Fill the application form and submit to the lender. They will verify the form, depending on which your loan will be approved.

Eligibility for Applying Gold Loan

The eligibility criteria for gold loan differs from bank to bank. The following are some of the general terms of the gold loans-

  • Customers applying for the loan should have a minimum age of 18 years.
  • The loan should be applied by the buyer itself. Meaning, the person should be the owner of the gold,
  • The gold you are applying for should be a minimum of 18 carats.
  • The borrower should be financially sound.

Documents Required for Gold Loan

While applying for the loan, you will be given a form which you need to fill with proper details. Following, you need to submit certain documents mentioned below-

  • Coloured passport-sized photograph
  • Residential proof
  • Identity proof
  • Form 60 or PAN Card

An Alternative of Gold Loan - Gold Mutual Funds!

Gold Mutual Funds is a variant of Gold ETFs. A gold ETF (Exchange Traded Fund) is an instrument that is based on gold price or invests in gold bullion. A gold ETF specialises in Investing in a Range of gold securities. Gold Mutual Funds do not directly invest in physical gold but take the same position indirectly by Investing in Gold ETFs.

Also, the minimum investment amount one would require to do in Gold Mutual Funds is of INR 1,000 (as monthly SIP). Since this investment is made through a Mutual Fund, investors can opt for systematic investments or withdrawals too. As Gold Mutual Funds units can be bought or sold from the fund house, investors do not face liquidity risks.

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2021 (%)
Axis Gold Fund Growth ₹16.2579
↑ 0.22
₹2605.3411.611.112.2-4.7
HDFC Gold Fund Growth ₹16.6813
↑ 0.18
₹1,2905.7411.41111.6-5.5
SBI Gold Fund Growth ₹16.2982
↑ 0.23
₹1,1386.34.211.91111.6-5.7
Nippon India Gold Savings Fund Growth ₹21.3791
↑ 0.24
₹1,3795.74.111.510.811.3-5.5
Kotak Gold Fund Growth ₹21.4937
↑ 0.21
₹1,2755.23.410.410.811.8-4.7
Invesco India Gold Fund Growth ₹15.7696
↑ 0.10
₹575.23.911.410.711.5-5.5
ICICI Prudential Regular Gold Savings Fund Growth ₹17.2019
↑ 0.15
₹6255.2411.110.711.3-5.4
IDBI Gold Fund Growth ₹14.4514
↑ 0.08
₹405.93.811.810.711-4
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 2 Dec 22
*Above is list of top Gold Funds having AUM/Net Assets > 25 Crore ordered based on 3 year CAGR returns.

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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