WHAT IS A GOLD LOAN?
A gold loan, as the name suggests, is related to gold. It is protected against gold jewellery or gold ornaments. In simple words, in a gold loan, the borrower has to deposit his gold to the bank or to the moneylender as security as to if he will not be able to repay the loan successfully, the bank or the moneylender will have all the legal rights to sell his gold and recover the gold amount. The amount of gold plays an important role in a gold loan. The quality of the gold has to be. Between 18 carats to 22 carats, and the purity of the gold is checked. The price of the gold is then checked, and the amount of loan that a person can take is 90% maximum of the market value of the pledged gold. The margin is kept by the bank or by the money lender in order to use it in any problem. The Gold Loan Per Gram is offered by the banks and by the money lenders.
HOW DOES A GOLD JEWELLERY FETCH YOU A HIGHER AMOUNT?
Today, the Reserve Bank of India (RBI), through its regulatory system, has announced that the banks in the country can now lend upto 90% of the gold jewellery or the gold ornaments value. The existing loan to value ratio was 75% maximum, but now it has increased to 90%. The Central Bank of India has increased the Loan To Value Ratio ( LTV) on the gold loans to provide relief to the bank's customers. The borrowers of the gold loan who are taking the gold loans to mitigate the financial crisis and the losses caused by the pandemic of coronavirus can now avail of a loan of a higher amount. The relaxation of the extension of the amount of loan from 75% to a maximum of 90% was till March 31, 2020.
The Reserve Bank of India said that according to the guidelines, the gold loans that different banks sanction in the country for non-agricultural purposes should not exceed the maximum limit of 75% of the gold jewellery and gold market price ornaments. So as to mitigate the economic impacts of the coronavirus on the small business holders, entrepreneurs, and households, the Reserve Bank of India has decided to increase the Loan to Value ratio from the limit of 75% maximum to the maximum of 90%. It is for the loan, which is protected against gold jewelry and gold ornaments.
This relaxation will help the people in the country. It will allow the Indian households and the borrowers to borrow more amount of money against the same gold than the amount of money that can be availed before. The households and the borrowers will be able to get more money by taking a gold loan and not selling the gold to get some money. The Muthoot Finance Gold Loan is affordable for the customers. Every person in the country has faced some financial loss during the pandemic of coronavirus. Most people do not even have the funds to fulfill the basic needs of the family. Therefore, the Reserve Bank of India has realized that the financial condition of almost everyone is not good and introduced the maximum limit to be 90%.
Also, the decision taken by the Reserve Bank of India to increase the maximum limit of the loan to value ratio from 75% to 90% is a big relief to all the borrowers and the small businessmen who were or who are struggling to avail themselves other loans in order to consolidate debts. The market value of gold is also high in these times, and this means that the borrower will be able to get a higher amount of money against the gold jewelry.
Also read this: Why A Less Interest Rate Is Incurred On Gold Loan