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 ordinary gold loan prescribed by Reserve Bank of India (RBI).
Granting Loan against Sovereign Gold Bond would be subject to 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 loan 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.
The Sovereign bonds are issued by the RBI. Since these are GOI bonds, they have sovereign guarantee.
This 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.
Demand loan is basically the ready to repay loan on demand of the lenders.
In demand loan, the bank can ask for the lent amount to be repaid by the borrower in relatively shorter duration.
The customer(s) have the liberty to repay the amount anytime without facing any pre-payment charges.
Overdraft is a service, where the customer can withdraw more amount than the available balance.
However, eligibility of loan depends on the relationship between the bank and the customer along with customer’s credit score.
Two types of Overdraft are Standard overdraft and secured overdraft.
The interest rate is 1 year MCLR + 2.0% per annum.
At current MCLR of 7.75% per annum,
the effective rate of interest will be 9.25% per annum.
Time needed: 5 minutes.
The process to apply for a Loan through SBI Branch (Offline) involves following steps-
Visit a nearby SBI branch. However, it does not matter if your account is with some other SBI branch.
Download the application form and fill required mandatory fields:
1. Applicant name should be same as on identity proof.
2. Address, Date of Birth, Monthly /Annual Income.
3. Loan Amount, Bank Account Number.
Last step, one should self attest all the proofs and good to submit the form at nearby SBI branch.
Interest rate starts at 8.20% to 12.50% per annum. However, rate of interest depends on the relationship between the bank and the customer along with 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.
|Charges||Loan Against SGB|
|Processing charge||Rs. 3500 + GST.|
0.50% of the loan amount subject to a minimum of Rs. 5000 plus applicable GST.
|Renewal charge||Rs. 2500/- p.a. + GST on renewal at the end of each year.|
|Penal interest on amount drawn in excess of the drawing power||Applicable Rate + 6% + applicable taxes or other statutory levies, if any|
|Sale of security in the event of default||The brokerage and other charges as per actuals|
|Charge for changing from fixed rate of interest to floating rate of interest||1000+GST|
|Charges for changing from floating rate of interest to fixed rate of interest||N.A.|
|Document Retrieval charge||N.A.|
|Cheque return charge||Rs. 250 per instance|
|Charges for Interim Valuation Report (IVR)||Rs 50/- per IVR|
|Sale of Securities in the event of Customer request||Rs. 5,000 /- plus applicable taxes and brokerages if any per instance|
HDFC bank does not offer loan against SGB as of now.
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