Page 117 - DMGT515_PERSONAL_FINANCIAL_PLANNING

Personal Financial Planning

Notes is the cheaper loan option for you. Though the interest rates on this loan are higher than
that of a home loan, it’s cheaper than that a personal loan or a loan against security.
Gold Loans: Loans which are given against gold of the borrower. It is a relatively new
concept in Indian financial system.

Self Assessment
State True or False:
6. Lending loans for educational purposes is a part of the priority sector lending activity for
Indian banks.
7. For several education loan applicants, the bank offers a holiday period on repayment
while the student is doing the course either on the principal or on the interest or both.
8. A credit card payment is in any case better than borrowing on a personal loan.
9. In case the person is shifting the loan to a different lender then most of the banks ask to pay
a fee in the range of 4% to 8% of the outstanding loan amount.
10. In case of fluctuating rate of interest the rate of interest changes according to the current
rate in the market.

Case Study Gold Loans-Personal Loan against Gold: A Financing
Option for Short-term Needs

or Indians, gold is considered as an essential investment from a cultural, emotional
and safety perspective. One bought, is a dead investment. It tends to lie in the locker
Fnot earning you any money. Why not make use of it in your time of need? You can
monetise this idle asset to help you tide over your financial need. So if ever you find
yourself in need of money, consider gold loans as an option. Gold loans also know as gold
deposits are loans given by banks/ NBFCs by taking gold as a security.
Gold loans are not new to the Indian market. It existed but in the unorganised sector
where money lenders used gold as a security for providing loans. Now banks have entered
this space in a big way because the market is very large considering the fact that most
Indians tend to have sufficient investment in gold. More importantly, with more and
more women working in the family, people have become broadminded. So the social
stigma that was once attached to taking a loan on gold is gradually being eliminated.
Off late, this product has become popular because of the substantial rise in gold prices. The
quantum of loan that one can get by giving gold as security has increased tremendously
making it an attractive loan proposition.
What is the process to be followed to obtain a gold loan?
You offer your jewellery to the lender who can be a bank or an NBFC. The lender will
evaluate the purity of the jewellery. The charge for evaluation is generally borne by the
borrower. Once the evaluation is done, the paper work for the mortgage is done. Banks
will ask you to produce personal documents such as Pan Card, address proof among other
things. The lender will give you a loan which in most cases can be up to a maximum of 80%
of the value of the jewellery. After having repaid the loan, you get your gold back from
the lender.
Contd...

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