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

Can we get loan on Sovereign Gold Bond?

Sovereign Gold Bonds are eligible to be used as collateral for loans from banks, financial Institutions and NBFC i.e. Non-Banking Financial Companies.
However, the Loan to Value ratio will be the same as applicable to ordinary gold loan prescribed by RBI i.e. Reserve Bank of India from time to time.
As per the RBI guidelines, granting a loan on Sovereign Gold Bond(s) would be subject to the decision of the bank or financing agency.
In this article, we are going to discuss “Loan against the SGBs” through the various government banks.

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

Documents Required

Individual

  • Application form and loan agreement
  • KYC documents such as identity proof, signature proof and address proof.
  • Certificate of sovereign gold bond.
  • For loan amount greater than Rs 50 Lac, last two years ITR with computation of income and last three months Bank Statement.

Non Individual

  • Application form and loan agreement.
  • KYC documents such as identity proof, signature proof and address proof.
  • Certificate of sovereign gold bond.
  • Audited Balance Sheet, Profit & Loss Account, Bank Statement and ITR return for the last two years.

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

Eligibility

  • A person resident of India – Individual or on behalf of minor child, or jointly with another individual.
  • Trust, HUF, Charitable Institutions and University.

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

Type of Loan

Demand Loan

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 on Sovereign Gold Bond through Punjab National Bank

Quantum Of Finance     Minimum – Rs. 50000/-
Maximum – Rs.10.00 lacs
Repayment PeriodTill the date of maturity i.e Maximum 8 years or residual period of the Gold Bond whichever is earlier.
How to Apply?Offline only
Documentation/Upfront ChargesNIL
Type of LoanDemand Loan
Overdraft
How Much Can I Borrow?
Advertisement
Margin is the difference between the amount of money borrowed and the value of the Sovereign Gold Bond that secures the loan.

Margin – Individuals – 25% and Other than individuals – 40%

Rate Of Interest

RLLR – 6.65% to 6.80% (June-2021)

IndividualRLLR+1.15%
Other than IndividualRLLR+2.15%

Currently RLLR i.e. Repo Linked Lending Rate is 6.65%. Therefore, The rate of Interest for Individual will be 1 Year 6.65%, + 1.15% = 7.80%(Minimum). However, for other will be 6.65% + 2.15% = 8.8%(Minimum)

Important Points

  • Loans will be available against SGBs held in Dematerialised form with the Depository Participant of NSDL only.
  • In case of demand loan, the disbursement of the loan should be by way of credit in the operative account of the borrower with the Bank.
  • Interest will be charged on annual basis and will be serviced as and when levied.

Loan on Sovereign Gold Bond through Union Bank of India

Quantum Of Finance     Minimum – Rs.50000/-
Maximum – Rs.25.00 lakhs
Repayment PeriodDemand Loan – 12 months
Overdraft – 24 months
How to Apply?Offline Only
Documentation/Upfront ChargesNIL
Type of LoanDemand Loan
Overdraft
How Much Can I Borrow?Margin is the difference between the amount of money borrowed and the value of the Sovereign Gold Bond that secures the loan.

Margin – Individuals – 30% and Other than individuals – 40%

Rate Of Interest

Demand loan1yr EBLR+1.85%
OverdraftEBLR+2.20%

Currently EBLR i.e. External Benchmark based Lending Rate is 6.70%. Therefore the rate of Interest for demand loan will be 1 Year 6.70%, +1.85% = 8.55%. However, for overdraft will be 6.70% + 2.20% = 8.9%

Important Points

  • Loan against Sovereign Gold bond held in physical form is NOT permitted.
  • Appropriate DPN note, Letter of continuity, Letter of general lien and setoff , Agreement for pledge of Bonds and any other document stipulated in sanction.
  • Interest will be charged on annual basis and will be serviced as and when levied.
  • Pledge/Lien on Sovereign Gold bond held in Dematerialized form with any Depository Participants.

Also Read Sovereign Gold Bond SBI | How to Buy SGB Online?

Loan on Sovereign Gold Bond through Bank of Baroda or Canara Bank

Bank of Baroda and Canara Bank does not give the loan against the Sovereign Gold Bond now.

Also Read How to Buy & Sell Sovereign Gold Bond in Zerodha? Gold Bond Taxation | Gold ETF vs Gold Bond

Advertisement
Spread the love