Loan against Sovereign Gold Bond | SBI | ICICI | HDFC | Interest Rate | Eligibility

Can I Take Loan Against Sovereign Gold Bond?

Yes!!, SGBs are eligible to be used as collateral for loans from authorized banks, financial companies, and Non-Banking Financial Companies.
The SGB loan to Value ratio will be the same as applicable to the ordinary gold loan prescribed by the Reserve Bank of India (RBI).
Granting a loan against Sovereign Gold Bond would be subject to the decision of the bank.

Let’s look at a loan from the State bank of India or ICICI Bank or HDFC bank where you can pledge your Sovereign Gold bonds to get a loan.
Kindly understand this loan product is only for loans against Sovereign Gold Bonds (and not gold funds/ gold ETFs ).
Before we dig deeper into the SGB loan offering, let’s first look at the basic information of Sovereign Gold Bonds.

Also Read Loan on Sovereign Gold Bond – UBI, BOB, PNB & Canara bank

Sovereign Gold Bond

The Sovereign bonds are issued by the RBI. Since these are GOI bonds, they have a sovereign guarantee.
These bonds are denominated in grams of gold. The issuance of the bonds lies within the government’s market borrowing plan for FY 2015-16 and onwards.

Also Read Sovereign Gold Bond : Best Returns on Gold Investment | 2020-21 Dates

Type of Loan

Demand Loan

A demand loan is basically ready to repay the loan on the demand of the lenders.
In a demand loan, the bank can ask for the lent amount to be repaid by the borrower in a relatively shorter duration.
The customer(s) have the liberty to repay the amount anytime without facing any pre-payment charges.

Overdraft

Overdraft is a service, where the customer can withdraw more amount than the available balance.
However, eligibility for a loan depends on the relationship between the bank and the customer along with the customer’s credit score.
Two types of Overdrafts are a Standard overdraft and a secured overdraft.

Also Read Why CIBIL Score is Important? | Check Credit Score | Improve | 2021

Loan Against Sovereign Gold Bond through State bank of India

Interest Rate

The interest rate is 1 year MCLR + 2.0% per annum.
At the current MCLR of 7.75% per annum,
the effective rate of interest will be 9.25% per annum.

Also Read SBI Loan Against FD : Interest Rate | Features | Benefits | Online | Repayment

Eligibility

• All individual or joint investors holding the SGBs.
• The margin of 35%. You can get the loan only for the 65% of the value of the SGB.
• if SGB is in physical form, the bonds must have been purchased via the SBI.
• Sovereign gold bonds in demat form, you must hold these bonds in a demat a/c with SBI Cap Securities Limited.
• If you have these bonds in another demat a/c and still want to take the loan from a bank, then transfer these bonds to SBI Cap Securities Limited.
• You must be at least 21 years old.
• Trust, HUF, Charitable Institutions, and Universities.

Features

• The minimum Loan Amount is Rs 20,000/- and the Maximum Loan is Rs 20 lacs per individual.
• Two types of loan facilities are available – Overdraft & Demand Loan.
• The tenor of the Overdraft is 36 months and the Demand Loan is 12 months.
• Processing Fee: 0.50% of the Loan amount with applicable Tax or Rs 500 with applicable Tax, whichever is higher.
• Interest to be serviced monthly.
• Principal to be repaid on or before the end of the term.

Also Read Sovereign Gold Bond Tax-Exemption with Example – STCG | LTCG | TDS

How to Take a Loan on Sovereign Gold Bond?

Documents

• Latest three monthly salary slip show deductions – of Self and Co-applicant.
• Copy of Form 16 – of Self and Co-applicant.
• Copy of IT return for last two years,
• Latest two passport-size photographs – of Self and Co-applicant.
• Proof of Identity – Copy of Voters ID Card or Driving License or Passport etc.
• Last 6 months’ bank statement of a/c where salary is credited of Self and Co-applicant.
• Proof of Residence – Copy of Electricity Bill/Telephone Bill/Gas Bill etc.

Also Read Loan Against Public Provident Fund | New Interest Rate | Eligibility | Process 2021

Loan against Sovereign Gold Bond through ICICI Bank

Features and Eligibility

• Only the Overdraft(OD) facility is available.
• Interest is payable only on the amount used.
• No pre-payment charges and flexible repayment options.
• Quick turn-around time and easy documentation of Loans against SGB.
• All individual or joint investors holding the SGBs.
• Trust, HUF, Charitable Institutions, and Universities.

Interest Rate

The interest rate starts at 8.20% to 12.50% per annum. However, the rate of interest depends on the relationship between the bank and the customer along with the customer’s credit score.
Interest is charged only on the amount drawn and for the period for which it is utilized. Interest is calculated on a daily basis and debited to your current account on the last day of every month.

How to Apply for a Loan Online?

• Login to Internet Banking with your credential.
• Go to the “Investment and Insurance” option and then Select the “Demat” option.
  
• Click on “Loan Against Securities”.
  

Loan against Sovereign Gold Bond through HDFC Bank

HDFC Bank does not offer loans against SGB as of now.

Also Read What is PF Advance Form 31 Rules, Eligibility, Online Filing Procedure and Claim Status