SBI Gold Loan

State Bank of India (SBI) is one of the largest banks among the public sector banks in India. The bank offers SBI gold loan scheme to provide loan against gold jewellery which can be used for several requirements such as marriage, business expansion, education of the child, building a property, etc. Existing SBI customers can avail gold loan of up to Rs. 20 lakhs by pledging of gold ornaments which includes gold coins sold by banks. In this article, we look at the SBI gold loan scheme in detail.

Eligibility Criteria

The following are the eligibility criteria for availing gold loans from SBI.

Any applicant age is above 21 years of age at the time of applying for the loan.
Anyone with a constant source of income can avail the loan which also includes bank employees and Pensioners.

Amount of Loan

The minimum and maximum amount of loan can be acquired as specified below: Minimum: The minimum loan amount of Rs. 10,000 can be obtained. Maximum: The maximum loan amount of up to Rs. 20 Lakhs can be obtained.

Types of SBI Gold loans

The SBI has gold loan schemes for professionals and salaried individuals. The amount received as a loan can be used for either multiple or specific purposes.

Margin

The margin for the SBI gold loan is 25% of the value of the gold.

Security

The gold ornaments duly verified for quality and quantity are pledged as security and are returned when the loan amount is repaid.

Repayment Period

The repayment period fixed for the borrower is up to 3 years. Interest will be levied from the account at a monthly basis but will become due for payment along with principal only at the maturity.

Processing Fees

For BIS Hallmarked Jewellery or Ornaments and specially minted Gold Coins sold by Banks: The charge will be around 0.50% of the loan amount or a minimum amount of Rs. 250, and the maximum amount of Rs. 500 and additionally with applicable services tax is remitted. For Non-Hallmarked Jewellery or Ornaments: Up to Rs.25000: The charge for your processing your loan application will be of Rs. 250 per application with applicable service tax. Above Rs.25000: The charge will be around 0.50% of the loan amount with applicable service tax or amount of Rs.250 with applicable services tax whichever is higher is remitted.

Loan to Value Ratio

Once the value of gold is calculated, SBI will apply a Loan to Value (LTV) of up to 75% to calculate your gold loan amount eligibility. If you are willing to take a loan amount lower than your maximum LTV, SBI may offer you a lower interest rate. The LTV ratio will be computed against the total outstanding in the account, including accrued interest, and the current value of gold jewellery accepted as security or collateral. The following points have to be remembered for this purpose:

The loan amount will be sanctioned with a margin of 35%.
The LTV of 75% has to be maintained throughout the tenor of the loan.
The LTV ratio has to be computed against total outstanding in the account including accrued interest.
The LTV ratio will be computed against the current value of gold.
In case the LTV Ratio crosses the stipulated limit of 75% on account of fall in gold prices, the customer will be intimated to replenish the margin either by way of a cash deposit or additional gold ornaments or coins.

Documents Required

The following are the documents which are necessary for processing your loan.

Application Form for Gold Loans
Two copies of photographs of the borrower(s)
Proof of Identity such as PAN card, Aadhar card
Proof of Address such as voter ID, ration card

Interest Rate

The interest rates charged on SBI's gold loan is 2.15% above the marginal cost of funds based lending rate (MCLR) for 1 year. Currently, it is 11.05% as mentioned on SBI's website.

Application Procedure

The eligible applicant who wants to apply for the SBI Gold Loan has to approach the nearest SBI branch of your area and collect the application form from the bank. Complete the application form with the necessary details and attach the required documents. After filling the form, submit the same to the appropriate bank.