 Introduction

 Gold Loan Sector & Market

 Positive Negative Aspect
 Features
 Procedure of Bank Gold Loan
 Indian Bank & Foreign Bank
 Current Affairs of Gold Loan Interest
 Documentation
 Opportunities
 RBI Measures on Gold Loan Companies
 What is private special affection for Gold Loan in India
 Conclusion
 Bibliography
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What is Gold Loan

As the name suggests this is the loan given against gold. Many nationalized banks,
private banks and other financial companies offer this loan at attractive rates. Many
go for this loan for short period to meet the requirement of their children’s education,
marriage and other financial problems in the family. And others think that instead of
keeping the gold idle at home or locker, loan against gold is the best option. Moreover
with the rise in gold rates the demand from companies and banks offering such loans
has raised. For instance, Muthoot Finance, one of the leading gold loan companies has
seen 24 percent rises in gold loan against 17 percent raise in the market value of
gold.
In finance, a loan is the lending of money by one or more individuals, organizations, or
other entities to other individuals, organizations etc. The recipient (i.e., the borrower)
incurs a debt and is usually liable to pay interest on that debt until it is repaid as well as to
repay the principal amount borrowed.
The document evidencing the debt (e.g., a promissory note) will normally specify, among
other things, the principal amount of money borrowed, the interest rate the lender is
charging, and the date of repayment. A loan entails the reallocation of the subject
asset(s) for a period of time, between the lender and the borrower.
The interest provides an incentive for the lender to engage in the loan. In a legal loan,
each of these obligations and restrictions is enforced by contract, which can also place
the borrower under additional restrictions known as loan covenants. Although this article
focuses on monetary loans, in practice, any material object might be lent.
Acting as a provider of loans is one of the main activities of financial institutions such as
banks and credit card companies. For other institutions, issuing of debt contracts such as
bonds is a typical source of funding.

CONTENTS
1. Personal Loan
1.1 Secured
1.2 Unsecured
1.3 Demand
1.4 Subsidized
2. Target market
2.1 Personal
2.2 Commercial
3. Loan Payment

Personal loan[edit]
Secured[edit]
See also: Loan guarantee
A secured loan is a loan in which the borrower pledges some asset (e.g., a car or house)
as collateral.
A mortgage loan is a very common type of loan, used by many individuals to purchase
residential property. The lender, usually a financial institution, is given security – a lien on
the title to the property – until the mortgage is paid off in full. In the case of home loans, if
the borrower defaults on the loan, the bank would have the legal right to repossess the
house and sell it, to recover sums owing to it.
Similarly, a loan taken out to buy a car may be secured by the car. The duration of the
loan is much shorter – often corresponding to the useful life of the car. There are two
types of auto loans, direct and indirect. In a direct auto loan, a bank lends the money
directly to a consumer. In an indirect auto loan, a car dealership (or a connected
company) acts as an intermediary between the bank or financial institution and the
consumer.
Other forms of secured loans include loans against securities - such as shares, mutual
funds, bonds, etc. This particular instrument issues customers a line of credit based on
the quality of the securities pledged. Gold loans are issued to customers after evaluating
the quantity and quality of gold in the items pledged. Corporate entities can also take out
secured lending by pledging the company's assets, including the company itself. The
interest rates for secured loans are usually lower than that of unsecured loans. Usually,
the lending institution employs people (on roll or on contract basis) to evaluate the quality
of pledged collateral before sanctioning the loan.

Unsecured[edit]
Unsecured loans are monetary loans that are not secured against the borrower's assets.
These may be available from financial institutions under many different guises or
marketing packages:

 Credit cards
 Personal loans
 Bank overdrafts
 Credit facilities or lines of credit
 Corporate bonds (may be secured or unsecured)
 Peer-to-peer lending
The interest rates applicable to these different forms may vary depending on the lender
and the borrower. These may or may not be regulated by law. In the United Kingdom,
when applied to individuals, these may come under the Consumer Credit Act 1974.
Interest rates on unsecured loans are nearly always higher than for secured loans
because an unsecured lender's options for recourse against the borrower in the event of
default are severely limited, subjecting the lender to higher risk compared to that
encountered for a secured loan. An unsecured lender must sue the borrower, obtain a
money judgment for breach of contract, and then pursue execution of the judgment
against the borrower's unencumbered assets (that is, the ones not already pledged to
secured lenders). In insolvency proceedings, secured lenders traditionally have priority
over unsecured lenders when a court divides up the borrower's assets. Thus, a higher
interest rate reflects the additional risk that in the event of insolvency, the debt may be
uncollectible.

Demand[edit]
Demand loans are short-term loans[1] that typically do not have fixed dates for repayment.
Instead, demand loans carry a floating interest rate, which varies according to the prime
lending rate or other defined contract terms. Demand loans can be "called" for repayment
by the lending institution at any time. Demand loans may be unsecured or secured.

Subsidized[edit]
A subsidized loan is a loan on which the interest is reduced by an explicit or hidden
subsidy. In the context of college loans in the United States, it refers to a loan on which
no interest is accrued while a student remains enrolled in education.[2]

Concessional[edit]
 POSITIVE & NEGATIVE ASPECT

A concessional loan, sometimes called a "soft loan", is granted on terms substantially

more generous than market loans either through below-market interest rates, by grace
periods, or a combination of both.[3] Such loans may be made by foreign governments to
developing countries or may be offered to employees of lending institutions as an
employee benefit (sometimes called a perk).

Target markets[edit]
Loans can also be subcategorized according to whether the debtor is an individual
person (consumer) or a business.

Personal[edit]
See also: Credit (finance) § Consumer credit
Common personal loans include mortgage loans, car loans, home equity lines of credit,
credit cards, installment loans, and payday loans. The credit score of the borrower is a
major component in and underwriting and interest rates (APR) of these loans. The
monthly payments of personal loans can be decreased by selecting longer payment
terms, but overall interest paid increases as well.[4]

Commercial[edit]
Main article: Business loan
Loans to businesses are similar to the above but also include commercial mortgages and
corporate bonds. Underwriting is not based upon credit score but rather credit rating.

Loan payment[edit]
The most typical loan payment type is the fully amortizing payment in which each
monthly rate has the same value over time.[5]
. Definition in Oxford
Gold loans (or gold deposits) may be undertaken to obtain an income return on gold. The gold
that is placed on loan (or deposit) may be either a financial asset (i.e., monetary gold) or a
non- financial asset (i.e., non-monetary gold.) The gold remains on the books of the gold
lender, and the lender retains the exposure to the market risk arising from movements in the
market price of gold.

Gold loans (or deposits) are not backed by cash collateral and, in some cases, are not
backed by non-cash collateral. However, the gold may be on-sold by the borrower. Gold loans
(or gold deposits) may be undertaken to obtain an income return on gold. The gold that is
placed on loan (or deposit) may be either a financial asset (i.e., monetary gold) or a non-
financial asset (i.e., non-monetary gold.) The gold remains on the books of the gold lender,
and the lender retains the exposure to the market risk arising from movements in the market
price of gold.

Gold loans (or deposits) are not backed by cash collateral and, in some cases, are not
backed by non-cash collateral. However, the gold may be on-sold by the borrower.

. 1The system by which the value of a currency was defined in terms of gold, for
which the currency could be exchanged. The gold standard was generally abandoned
in the Depression of the 1930s.
More example sentences

 ‘The classic gold standard was a monetary regime constructed to preserve financial and
economic stability.’
 ‘National currencies based on the gold standard were thought to be uniform, leading toward
a global monetary standard.’
 ‘The British thereby laid the basis for what was to become the world monetary system based
on the gold standard and bank notes.’
 ‘Research in recent years has greatly revised our understanding of the origins of the classical
gold standard.’

 ‘An international financial system based on the gold standard emerged during the nineteenth
century.’
POSITIVE & NEGATIVE ASPECT

Features of Gold Loan

Following are the Features of Gold Loan:

 You can avail Loan up to Rs.1 Crore or more & up to 70% of value for any
purpose
 You get 100% Safety & Security of your Gold Jewellery
 Get your Loan processed in less than 30 minutes
 Enjoy Anytime Liquidity.

Instant Gold Loan

You can now walk-into any of our ICICI Bank branch offering Gold loans with
your jewellery and you can avail gold loan for any value from Rs. 10,000 to Rs.
15 Lakhs instantly. With our simple and easy documentation process, the loan
can be availed across the counter instantly.
Safety
Your gold is absolutely safe with us. Your Gold is kept in Vault Safe in Strong
Rooms of ICICI Bank giving you the guaranteed assurance of complete
transparency and peace of mind. You Gold is valued in your presence, sealed
and kept in Vault Safe. Whenever you wish to get your Gold back it will be given
back to you in exactly the same state as you submitted in the first place.

Safety
If you need money for fulfilling your short-term needs, then you can avail
gold loan. You need not worry about the safety of your gold ornaments and
jewelry. Your gold will be stored in the vaults of the bank or financial
institutions. You do not have to incur other storage expenses such as locker
charges. You must feel that your gold is safe with the bank or financial
institutions.

Quick disbursal
For availing gold loan, you are required to approach the institution with
minimal documentation. You must provide your identity proof and proof of
residence. Yes. You have read it right. You are not required to submit your
income statements or tax returns. These are not required. The institution is
also not going to check your credit report. It will just verify your
documentation and check the authenticity of your gold provided by you. You
will be provided with the required gold amount within half an hour upon
approval. You also do not have to provide any guarantee or references.

Simple interest loans

You are not required to pay the monthly commitment of EMIs like that of
other loans. This saves the interest paid by the borrower. These loans work
on the principle of simple interest. You have to commit low. It is absolutely
fine even if you are paying only interest for a month. If you fail to pay
interest in a particular month, you must pay in the next month.

Low interest
The gold loans are cheaper with respect to the interest rates charged by the
leading banks and institutions.

No debt trap
You are not caught in a debt trap. It means if you are unable to repay the
loan amount, then you can ask the bank to keep the gold and terminate the
loan obligation. Well, this would be affecting you emotionally. But the crux is
that you are supposed to refinance the debt obligation.

Prepayment and repayment

You can prepay the loan when you desire and have surplus funds with you.
There are no prepayment charges involved. You can repay as and when you
wish. The interest amount also gets reduced as you repay your loan.

So, dazzled by the gold loan features and benefits? So, next time, when you
are in need of urgent cash, you can avail gold loan instantly. Provided you
have the gold!

Customer oriented Services

Quick Loan disbursal
Avail minimum loan amount of Rs. 1500 and no maxim
 POSITIVE & NEGATIVE ASPECT

Advantages of Gold Loan

 Gold loan doesn’t demand any certificate to show your salary or income and even no
credit card history is required. Thus even unemployed and non working people can go
for gold loan.
 Unlike any other unsecured loan, gold loan doesn’t require many papers, only few
documents such as ID proof and address proof is enough to avail for such loan.
 One of the main advantages of gold loan is its low interest rates. Usually loan over
gold is provided at the interest of 12-16% per annum and this is quite low compared
to personal loans available at interest rates of 15-26% per annum.
 In rural areas Agricultural loan against gold is also available for agriculturist at very
nominal rate of Interest of 7%-8%, proof of agricultural document needs to be
provided
 Gold loan is the most simple and convenient forms of loan because here all you need
to do is pledge your gold with a bank or finance company and get upto 80% of the
market value of the gold as a loan.
 Borrower will be given an option to pay only interest during the entire term and at the
end of the tenure you can pay complete borrowed amount in single shot.
 In case of gold loan processing time is very less. Usually banks take just few hours to
complete the process where as in case of NBFC’s (Non Banking Financial
Companies) a few minutes is enough for the same. So for immediate financial help
this is the best option.

Charges associated with Gold Loan:

 Loan processing charge: While some of the service providers may waiver these
charges, some banks do charge a processing fee.
 Valuation Charge: These are the charges to be paid to the valuator. These charges are
also specific to the service provider and those having in-house valuators do not charge
any extra amount for valuation.
 Late payment penalty: Most of the service providers charge late payment penalty and
this too can vary from one institution to the other.
 Pre-payment penalty: Most of the service providers do not charge a penalty for
repayment before the loan tenure is over. But some may still have this charge in place.
 It is advisable to check with the loan provider before taking the loan. These charges
could change the amount that you may finally receive.