Now Gold Jewelry To Get You A Higher Loan Amount
NEW DELHI : 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.
August 2, mint reported that growing economic uncertainty in the wake of the coronavirus outbreak has led to an increase in demand for gold loans, with lenders seeing up to 30% growth in disbursements.
“Once this is done, clients will be entitled to up to 20% more gold loan amount than they are currently getting,” said Gaurav Gupta, CEO of MyLoanCare, a marketplace for loan products. .
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 without prepayment charges, ”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 gold lending LTV ratios, banks are free to set their own LTV ratios within the regulatory cap based on their perspective on the trajectory of the price of gold, risk margin requirements and credit risk assessment of applicants. “Since gold prices have already risen 40% this year, some banks may take a more conservative view when setting LTV ratios,” said Naveen Kukreja, CEO and co-founder of Paisabazaar.com , an online marketplace for products.
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