Gold jewelry to get you a bigger loan amount


On August 2, Mint reported that growing economic uncertainty in the wake of the Covid-19 outbreak had led to an increase in demand for gold loans, with lenders recording up to 30% growth in disbursements.

Livemint, New Delhi | By Renu Yadav

POSTED ON AUGUST 07, 2020 07:30 AM IST

Gold lending customers will be able to borrow up to 90% of the value of the yellow metal compared to the existing 75%, the central bank said. This decision is a relief for cash strapped borrowers looking for such loans. The increase in the loan-to-value ratio (LTV) – the proportion of the value of the collateral that a lender can provide in the form of a loan – will be available until March 31, 2021.

On August 2, Mint reported that growing economic uncertainty in the wake of the Covid-19 outbreak had led to an increase in demand for gold loans, with lenders seeing growth of up to 30% in disbursements.

“Once this is done, customers will be eligible for up to 20% more gold loan amount than they are currently getting,” said Gaurav Gupta, CEO of MyLoanCare, a marketplace for products from ready. The new LTV standards will only be applicable for new loans. “The loan amount is decided at the time of subscription, therefore existing borrowers can contact the lender and re-let (prepay and re-qualify) loans to new standards. These are short term loans and generally do not have a prepayment charge, ”he said.

“This move will provide support for people in managing their financial liabilities during the pandemic,” said Raj Khosla, founder and CEO of financial services company MyMoneyMantra.com.

The more than 30% rise in prices since April has led to an increase in demand for gold loans, as customers can borrow more for the same amount. Prices hit ??55,448 per 10g on August 6, according to the Indian Bullion and Jewelers Association. While the RBI has increased the regulatory cap on LTV ratios for gold lending, banks are free to set their own LTV ratios.

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