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Categories: Gold

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 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.

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

Sovereign Gold Bond

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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.

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

Type of Loan

Demand Loan

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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

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.

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

Loan Against Sovereign Gold Bond through State bank of India

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Interest Rate

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.

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

Eligibility

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  • All individual or joint investors holding the SGBs.
  • Margin of 35%. You can get the loan only for the 65% of the value of the SGB.
  • if SGB 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 bank, then transfer these bonds to SBI Cap Securities Limited.
  • You must be at least 21 years old.
  • Trust, HUF, Charitable Institutions and University.

Features

  • Minimum Loan Amount is Rs 20,000/- and Maximum Loan is Rs 20 lacs per individual.
  • Two types of loan facility is available – Overdraft & Demand Loan.
  • Tenor of Overdraft is 36 months and 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.

How to Take a Loan on Sovereign Gold Bond?

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Time needed: 5 minutes.

The process to apply for a Loan through SBI Branch (Offline) involves following steps-

  1. Visit Branch

    Visit a nearby SBI branch. However, it does not matter if your account is with some other SBI branch.

  2. Application Form

    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.

  3. Document Submission

    Last step, one should self attest all the proofs and good to submit the form at nearby SBI branch.

Documents

  • Latest three monthly salary slip showing 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 photograph – 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.

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

Loan against Sovereign Gold Bond through ICICI Bank

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Features and Eligibility

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

Interest Rate

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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.

ChargesLoan Against SGB
Processing chargeRs. 3500 + GST.
0.50% of the loan amount subject to a minimum of Rs. 5000 plus applicable GST.
Renewal chargeRs. 2500/- p.a. + GST on renewal at the end of each year.
Pre-payment chargeNil
Penal interest on amount drawn in excess of the drawing powerApplicable Rate + 6% + applicable taxes or other statutory levies, if any
Sale of security in the event of defaultThe brokerage and other charges as per actuals
Charge for changing from fixed rate of interest to floating rate of interest1000+GST
Charges for changing from floating rate of interest to fixed rate of interestN.A.
Document Retrieval chargeN.A.
Cheque return chargeRs. 250 per instance
Charges for Interim Valuation Report (IVR)Rs 50/- per IVR
Sale of Securities in the event of Customer requestRs. 5,000 /- plus applicable taxes and brokerages if any per instance
GST, applicable as per the prevailing rates will be charged in addition to these charges.

How to Apply the Loan through Online?

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

Loan against Sovereign Gold Bond through HDFC Bank

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HDFC bank does not offer loan against SGB as of now.

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

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