Demand for loan against gold rises amid pandemic

Vijay C Roy
Tribune News Service
Chandigarh, July 2

After losing job during the pandemic, Chandigarh-based Manpreet Kaur (name changed) mortgaged her gold as she needed money to pay her credit card dues. She did not opt for EMI moratorium because of high interest rate and instead took loan against gold at 7.5% interest from a public sector bank. Similarly, Rahul Sharma (name changed) from Jalandhar mortgaged gold to pay home loan EMIs.

According to bankers and non-banking financial institutions, there has been a quantum jump in demand for gold loans in the region as price of the yellow metal is on the upswing. The gold was quoted at Rs 46,600 per 10 gm (22 carat) in Chandigarh on Thursday.

“We have seen a significant rise in gold loans in the past few months. The demand is coming from individuals, traders and small businesses as we offer loan against gold at 7.5% interest,” said Rana Ashutosh Kumar Singh, Deputy MD, SBI.

Currently, the rate of interest on gold loan starts at 7.5% and can go up to 29% depending upon bank and NBFC. As compared to gold loan, the rate of interest on personal loan is very high.

SBI is offering gold loan to MSMEs (proprietorship firms only) for general business purpose, augmenting working capital, acquiring machinery, equipment, tools for repair and renovation.

“With the lockdown impacting jobs and businesses, many customers opted for loan against gold. Besides the surge in gold loans, people are also coming for closure of such loans as they are getting good value for their mortgaged gold from jewellers,” said Jaswinder Kaur, branch manager, Muthoot Finance, Jalandhar.