Gold Archives -

Do The Maths Of EMI & Down Payment Before Buying Your Dream Car

Thu, 23 Feb 2023 04:40:07 +0000

The Buyt Desk

Ravi had a dream of owning a car from his childhood. After getting his first job, he fulfilled his dream and purchased a car worth Rs. 10 Lakhs on a five-year loan tenure. Ravi didn’t have enough money and did not make any down payment. Instead, he took a car loan and made zero down payments. Do you think Ravi made the right decision?

Many of you will say yes as at least Ravi fulfilled his dream of owning a car. But at what cost? There is nothing wrong in achieving your dream but when it is linked to your wallet then financial management matter as well.

Ravi purchased a Rs 10 Lakh car with no down payment as he didn’t have the down payment amount. Otherwise, it would have been 10-12% of the car value, i.e., around Rs 1 lakh of the down payment.

Assuming he got the loan at a 9% interest value for five years. His EMI would be Rs 21,049. According to this calculation, he would pay Rs 12,62,938 for the car after five years. The total interest he would pay is approximately Rs. 2 Lakhs, 48 thousand.

What would have happened had he waited a few years to accumulate the sum and get the car all in cash?

Suppose Ravi invested Rs 21,049 in a monthly SIP offering a 9% return for three years (9 % is an average return a SIP offers).

A SIP of 21,000 for three years with 9% interest would fetch him Rs. 8,77,613
A SIP of 21,000 for four years with 11% interest would fetch him Rs. 12, 80,725.

In addition to that, a car is a depreciating asset. Its value gets cut down to 25% right after coming out of the showroom. So, after five years, by the time the car loan tenure end, its value will come down to half.

On the other hand, if Ravi chose to invest the EMI cost in SIP, it would fetch him more money than his car value and keep him free from liability.

Furthermore, these days maintaining a car is getting costlier with the rise in fuel price and maintenance costs. Also, taking the car out in traffic is no less than a pain.

Conclusion – If owning a car is your dream and you believe it would increase your productivity, then buying it on loan is worth it. But, if there is no urgency, there is no point in buying a car on loan. Instead, invest the amount you can spend on EMI and purchase it in cash after a few years. Even a 50-60% down payment can cut down the significant interest amount.

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6 Reasons To Invest in Gold Right Now

Sun, 12 Feb 2023 15:01:37 +0000

The Buyt Desk

The prevailing rate of 24k, 10gm gold is Rs 59,525.00. It is the all-time high price of yellow metal. Last year, its prices grew a few points during this period and came down. People invested in gold and made a good profit at that time. Now, if you again want to draw profit from the gold price fluctuation and are in doubt about whether to invest in gold or whether it’s been too late to invest? There are 6 factors that indicate that it is the right time to invest in gold –

Statistics show that most developed countries may have slow growth in the financial year 23-24, a positive thing for gold.
The financial market was volatile last year and is expected to be so in the coming years. It is a positive sign that gold prices will spur further.
Most developed countries are facing moderate to mild recessions. It is again positive news for gold.
The central banks of different countries are adding gold to their treasury to cut down their dependence on foreign reserves. Positive news for the yellow metal.
The crypto market has been crashing and making people realize that nothing can replace gold. It is the only hedge in the volatile market.
Most major central banks across the world have been increasing interest rates. The rise in the interest rate means a downfall in the gold price. But, because inflation is not slowing down, chances are high that the hike will slow down and stop eventually. It is another positive sign for gold.

If it happens that all the banks in the world do not increase their ROI, then things will remain positive for gold. However, considering the prevailing uncertainty, it is difficult to predict the market.

While considering investing in gold, it is imperative to know that gold is not like other asset classes whose value calculation is directly related to the values of other assets and cashflows in the market. Gold price gets influenced by demand and supply. The geopolitical disturbances disrupt this equation. It makes the gold prices remain dormant for a long time, and also a sudden change in the price.

As far as investment in gold is concerned, you can rely on gold as it has performed well in the last couple of years. However, it has failed to give the kind of return the commodity market delivers always. Giving 5-10% of your portfolio to gold is a good approach when you look for a long-term investment. Experts say that it should never be more than 15% of the investment portfolio in any case.

The rise in the price of gold might allure you to invest in it. But don’t be irrational, or your entire calculation may go wrong. If you have already allocated 10-12% of your investment to gold, do not increase it further.

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Gold Vs Silver! Which Metal is Good for Investment?

Tue, 17 Jan 2023 16:29:55 +0000

The Buyt Desk

Time has proven that investment is the only way to grow money. The gold and silver jewelry purchased once for use acted as a hedge during the crises for most Indians.

In the last few decades, many investment products came in, but gold and silver remained on top of the list of investors with limited liquidity and risk potential.

Both gold and silver are considered safe investment avenues because of being precious and risk-free. But, when the question of choosing between two metals comes, gold always overshadows silver, for the reason that it is usable and considered prestigious.

Silver is also precious, but it never got the importance equivalent to gold. However, after the rise in the gold price, investors’ attention shifted to silver, and its demand rose significantly.

The magnificent increase in supply and demand of this metal has made investors of all levels think about it.

Gold Or Silver, Which One You Should Buy

The return from an investment highly relies on the liquidity put in and the risk-taking potential of investors. Gold’s performance is consistent, and it has given good returns in the past, but the cost of owning this product is high. At the time of writing this piece, Gold is trading at 57,790 per 10-gram 24 Karat. On the other hand, silver is trading at Rs. 727.50 per 10 grams. It is evident that there is a vast margin between both precious metals, but that does not mean silver is not a performing investment product.

Next, the rule of volatility says the assets that cost less are likely to give more gains or losses because a slight change in their price leaves a significant impact.

Example: With 50,000 liquidity, if you wish to invest in gold, you will get 10 grams of metal. The same corpus when you invest in silver, you get roughly 100 grams.

Suppose gold gained Rs 100/10 grams and silver Rs 10/10 grams. The 10 grams of gold will get you a profit of Rs 100, while silver will earn Rs 600-700. A slight variation yielded a great return.

Gold Vs Silver Performance in 2021-22

The financial year 2021-22 was challenging for both metals because of the volatility. Gold fluctuated between Rs 47,895 to 50,005 per 10 grams and failed to deliver the anticipated return.

The same happened with silver too. However, analysts are still optimistic about both precious metals. In fact, considering the industrial use of silver, they anticipate more from silver than gold.

According to reports, Global demand for silver is anticipated to reach Rs. 1,155 million ounces by 2025. It means silver will grow at a CAGR of 2.98%.

It would touch 1.29 billion ounces in 2023. The last this metal breached the one billion figure was in 2015. Green infrastructure demand and investment in renewable energy will further spurge the demand for silver, and it will help silver give magnificent returns in the long run. The metal’s rate in 2019 was Rs 40,600/kg and currently trading at 63,800.

Conclusion – Silver is an investment avenue for those having less liquidity. Increased industrial use of metal may contribute to the rise of its demand and give investors a reason to smile.

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3 Ways of Adding A Golden Touch To Your Investment Portfolio

Tue, 01 Nov 2022 04:46:18 +0000

The Buyt Desk

Gold is purchased as an investment and wearable. Most Indians invest in gold every year. Let us understand the benefits of including gold in our investment portfolio.

Gold is a beautiful precious yellow metal. For decades it has enticed people, especially women all over the world. Its beauty and appeal have made Indians’ gold obsession stronger. India is a major gold consumer as we love to possess gold ornaments and it is considered auspicious to buy gold during special life events and festivals. Irrespective of gold rates, Indians will buy gold.

Why should Gold be part of your investment portfolio?

Growing up in an Indian household, we have seen gold in the form of wearable or temple accessories and very less as an investment. We inherit gold from our parents and it may be running in the family for many generations. Currently, when the gold rates have reached sky-high, our way of looking at gold has changed. For this generation, gold is an investment.

The global economy is rapidly changing and it will be favorable if we diversify the portfolio. Gold is an inflation hedge. Gold can be your long-term investment and it will help you against bad stock market swings. Gold even works as insurance in times of distress like economic crises, government failures, natural disasters, or financial crises. The perceived value of gold rises during inflation causing contagion in financial markets which depreciates the local currency, bonds, and so on.

What are 3 Gold Investment Alternatives?

The 3 gold investment alternatives are Sovereign Gold Bonds (SGBs), Gold Exchange Traded Funds (ETFs), and Physical Gold.

Sovereign Gold Bonds (SGBs)

On behalf of the Government of India, SGBs are issued by the Reserve Bank of India (RBI) in multiples of one gram of gold. SGB is traded on the market. The bondholders will not possess physical gold but the value of a bond will be affected by fluctuations in the gold rate. The market returns of SGB are related to the price of gold. SGBs pay interest semi-annually at a fixed rate of 2.50 % per annum on the initial investment. SGBs can be used as collateral for loans. The minimum holding duration of SGB is 5 years hence it is for investors with modest liquidity demands and a lengthy time horizon.

Gold ETFs

The gold fund is an open-ended mutual fund that invests in Gold ETF units. Like SGB, the returns and the market price of gold are influenced by its price changes. Compared to actual gold, ETFs will not cause investors inconveniences of storage and paying charges. On behalf of the investors, the ETF management keeps the physical gold in the government treasury. Opening a trading – Demat account with any broker is necessary to invest in gold via ETF. Gold ETFs are for investors with strong liquidity requirements and a short time horizon. These may be sold on the exchange at any moment. Hence it is for investors who cannot commit to long-term investment owing to immediate financial demands. The ETF management charges service fees. The returns on Gold ETFs are much lower when compared to the real gold return. These can also be utilized in regular SIPs and later redeemed for consumption.

Physical Gold

Physical gold is the most purchased alternative as it is a direct way to gain exposure to gold. Physical gold can be in the form of Bullion, Jewelry, or Coins and can be purchased from jewelers. The purity decides the value of physical gold. Storing physical gold is a task as there is a danger of theft hence it may need lockers which will incur storage costs. In times of distress, physical gold is best as it is easily accessible and liquefiable. This form of gold can also be used for gifting. This form of gold is for long-term investors and the one who wishes to speculate on gold prices. To eliminate making charges, go for billions.

Summing up

Irrespective of the returns gold generates, it should be included in every long-term portfolio. No method arrives at a perfect allocation percentage in the portfolio. Gold is an investment and also acts as insurance in times of distress. Based on your conditions and investment requirements you can choose any one form of gold for investment or multiple alternatives. Each has its pros and cons. SGB generates tax-free profits. ETF is liquid and may raise or decrease its gold holding. Physical gold can be passed on for generations and gifted.

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How Sovereign Gold Bonds Taxed?

Tue, 04 Oct 2022 04:04:02 +0000

The Buyt Desk

Gold is considered one of the safest investment options in India. The sovereign gold bond (SGB) is one of the ways to invest in online gold.

There are many upsides to investing in gold via sovereign Gold Bond, but the assured interest rate of 2.5% is one of the best, and therefore this product is higher on-demand than other avenues. The earned interest is paid to the bondholder biannually and goes directly into the account. But besides knowing about the gains you make from SGB, you should also be cognizant of how you will be taxed.

The interest and capital gains with SGB, the interest earned is taxable and are processed every year according to the bondholder’s tax slab. Nevertheless, the capital gains upon the sovereign gold maturity are non-taxable.

However, there is an anomaly prevailing about whether capital gains are taxable when the SGB bond is redeemed prematurely. It is one of the most asked questions on the RBI website. Therefore, you must have a clear understanding of how the interest earned from SGB and capital gain are taxed.

Though more clarity on the subject is still awaited, the experts in the field considered it exempted, provided the bondholder is redeeming it and not transferring it.

Sovereign Gold Bond Taxation

The SGB comes for the eight-year tenure. It comes with the option of early redemption after the fifth year, the date on which the interest is due.

According to the experts and reports, the long-term capital gain coming through SGB will be taxed at 20% and comes with an indexation advantage. If a bondholder is redeeming it after five years, i.e. the locking period but before eight years, i.e. the bond maturity period, the interest he will earn on SGB will be taxed just like income from other sources.

However, TDS would not apply to that bond. The interest earned on SGB gets taxed under the Income Tax Act of 1961. There will be no tax on capital gains coming from the SGB redemption. On the other hand, any long-term capital gains coming from SGB transfer are eligible for indexation benefits.

SGB is a better option to invest in gold in comparison to other avenues, such as digital gold, Gold ETF and physical gold. The interest of 2.5% earned is a bonus. It is over and above the price movement of gold even if it is taxed at the bondholders’ marginal slab rate, which for most investors is 30% plus surcharge and cess.

The conclusion, you make gains on gold prices moving up till maturity, which in most cases happens, and is free from tax.

And if you have a question about whether it is applicable on SGB purchased through any market, primary or secondary, i.e. stock exchange, the answer is yes.

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What You Should Know Before Buying Digital Gold?

Sat, 24 Sep 2022 03:03:29 +0000

The Buyt Desk

Buying Digital Gold is as good as buying Physical Gold but much easier and quicker. There are many benefits of digital gold but let us understand a few facts.

Indians are fond of gold both in the form of wearable and investment (coins and biscuits). And buying gold was not an easy task. Now that digital gold is in the market, buying and selling gold has become a cakewalk. Now, one can buy the most loved metal online in just a few clicks and similarly sell it too. Digital gold can be brought for any amount even as small as Rs 100 and also need not worry about storing the gold and its safety. You can buy the digital gold yourself without the help of a broker, or agent and also you don’t need a Demat account. If not physical gold, digital gold, gold exchange-traded funds (ETFs) and sovereign gold bonds are the options.

What is Digital gold?

Digital gold is also physical gold which is bought online but stored in a secured vault with the seller on the customer’s behalf. An equivalent weight of physical gold is parked in the secure vault. It can be easily brought on many digital platforms. Digital gold is a good option for risk-averse millennials and young investors as they will hold the gold virtually. This is a perfect platform to park one’s money in a versatile and liquid gold investment without owning a safe or bank locker.

Where to buy Digital Gold?

Many payment wallets and financial service provider apps sell digital gold. Investors can buy gold in small amounts or can incrementally build gold holdings. Later digital gold can be sold or converted to physical gold in the form of coins and ingots.

What you should know before buying Digital Gold?

Investment in the yellow metal has always been profitable and encouraged in our society. So has digital gold lived up to its promise. It is the rebirth of conventional physical gold and is considered a strategic investment asset. Below are a few things you should know before investing in digital gold –

Quality assurance – Always do due diligence before investing in digital gold. Confirm the quality of the physical gold that you are buying. Check with your seller about the gold purity and get the certificate of gold purity. There are exclusive 24k gold sellers which is the highest purity of gold.
No limit to buy – There is no limit on the quantity of digital gold that can be purchased. Even digital gold worth Rs 100 can be brought and there is no upper limit established. Just like gold purchases from any offline stores, for purchases above Rs 1.5 lakh these platforms ask for additional know your customer (KYC) details.
Know the price spread – In such platforms, a higher price is charged for gold buyers than the price offered to gold sellers. This difference in the price of selling and buying is known as the spread. For digital gold, this difference is usually 2-3%. This includes credit card or bank payment charges of 1-2%. Also 3% GST is levied on gold purchases and this is a loss when non-GST registered customers sell it back.
Tax invoice – There are many online sellers and platforms that deal with digital gold. Not all platforms are direct sellers but conduits between buyer and seller. PhonePe, PayTM and Amazon are a few such platforms. SafeGold, MMTC-PAMP India, and Augmont are direct digital gold sellers in India. Customers’ transactions of both buying and selling digital gold are reflected in their digital gold accounts. And through their digital gold account, one can download the invoice. Even the Seller emails the buyer a valid Tax Invoice.
No central digital gold authority – There is no regulatory authority for the digital gold industry even after the rapid growth. So it is the investor’s responsibility to do the necessary due diligence before investing in digital gold. Recently SEBI has entered into bar stock brokers from selling digital gold. But structural guidelines are still awaited.

Summing up

If you are a new investor in digital gold, be mindful of the above 5 points. This should be good enough to embark on a profitable investment journey. Keep yourself updated on the latest developments in the digital gold industry. There may be new updates soon.

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Why Should You Invest in Sovereign Gold Bonds?

Mon, 25 Jul 2022 03:46:54 +0000

The Buyt Desk

Sovereign Gold Bonds are issued by the Reserve Bank of India to retail investors. It is the newest way of holding e-gold. There is no exchange of physical gold. Sovereign gold bonds are held in either a Demat account or through a paper bond.

For the financial year 2022-23, RBI issued the first tranche of SGB on June 20, 2022. It was open for buying the bond for 4 days i.e until June 24, 2022. The price was fixed at Rs 5,091 per gram of gold. And as per the government decision, a discount of Rs 50 per gram was given to the online investors and to investors who paid digitally. The second tranche will be available from August 22, 2022, till August 26, 2022.

What investors should know about the SGB scheme?

Who can invest in SGB – The gold bonds under the SGB scheme can be bought by Resident individuals, Hindu Undivided Families (HUFs), universities, trusts and charitable institutions. Even individuals on behalf of a minor child or jointly with another person can buy the bonds.
Price per gram – The gold bond’s nominal value is proportional to the simple average closing price of 3 days of 999 purity gold. This value is arrived at by the India Bullion and Jewelers Association Ltd (IBJA). The final three business days of the week prior to the subscription period are considered for the calculation of the price per gram of gold.
Interest SGBs offers – SGB offers fixed interest of 2.50 % per annum to the investors. Interest is paid twice annually, every 6 months on the nominal value. The interest paid is apart from the rise in the value of gold at the time of redemption.
Tenure of SGB – The tenure of SGB is eight years. But premature redemption after the fifth year is possible.
Buying SGB – The gold bonds are sold through commercial banks, Clearing Corporation of India Limited (CCIL), Stock Holding Corporation of India Limited (SHCIL), National Stock Exchange and BSE and designated post offices (as may be notified). Bonds can either be purchased directly or through agents.
SGB payment – The SGBs can be brought by paying in cash (only up to Rs.20000/-), demand draft, cheque or electronic banking.
Buying Size – Investment will be in multiples of one gram of gold. As per the rules, the minimum investment will be one gram and the maximum can be up to 4 kg for individuals, 4 Kg for HUF and 20 kg for trusts and similar entities per financial year. The limit is calculated considering the bonds brought across the tranches in that financial year including the ones purchased from the secondary market.
Tradability – The SGBs are eligible for trading.

Benefits of investing in SBG

Safe investment – SBG is a sovereign guarantee as they are issued by the Reserve Bank of India (RBI) on behalf of the government. They are always a safe bet.
Add on interest – The gold price keeps increasing. Similar to physical gold, even the price of gold in bonds keeps increasing. Apart from this increase in price, one will also get 2.5 % fixed interest annually on the investment. So the investment is growing and also paying you interest every 6 months.
Tax – There is tax exemption to an individual on the capital gains tax on redemption of SGB. To any person transferring the SGB, on long-term capital gains, the indexation advantage is provided. But the interest on SGBs is taxable as per the provision of the Income Tax Act, 1961, (43 of 1961).
No Cost for the safety of gold – SGBs have no holding or storage cost, unlike digital gold.
Collateral for Loans – The SGBs help you in liquidity as they can be used as collateral for loans. It is similar to gold loans. Even the loan-to-value (LTV) ratio is equal to ordinary gold loans as directed by the Reserve Bank from time to time.

Summing up

All investors who want to buy physical gold should buy gold bonds instead. As discussed above, they are a great credit-risk-free form of investment. Unlike physical gold and digital gold, SGB has no making charges or annual fees and also has indexation benefits. SBG comes with storage cost-free and charge-free gold investment. SGBs are completely safe, as the RBI is the guarantor. The best deal is 2.5% fixed interest annually earned by the investment. So, one should definitely go for sovereign gold bonds.

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What are the Advantages and Disadvantages of Taking a Gold Loan?

Thu, 28 Apr 2022 12:47:31 +0000

The Buyt Desk

When in emergency, Gold loan is the quickest option as you will receive money in just a few hours. But it has a few drawbacks. Let us look into its pros and cons.

Gold loan is the Loan you get against your Gold. As Indians have gold ornaments lying idle in safe deposits, they can go for gold loans to generate some funds. It is considered as the quickest secured loan in an emergency situation. You need to vouch your gold ornaments or coins minted by banks with your loan lender to get immediate money. The loan offered is usually 75% of the vouched gold value. You will get back all your gold ornaments and coins you have pledged after complete repayment of the loan. Various banks and Non-Banking Financial Company (NBFC) provide gold loans. You can avail this facility by walking in to their bank/office or by registering through their websites or mobile app.

What is the Gold Loan process followed by Banks and NBFCs?

There are few steps that lenders follow prior to the disbursal of a gold loan-

Gold submission – Once you apply for a loan with the lender (online or offline), the lender collects the gold from you. You need to submit your gold articles that you are going to pledge to the concerned person. If it is an online application, lenders will come to your doorstep to collect articles and if offline application then you need to bring the gold to your lender.
Gold evaluation – The lender evaluates the overall value of your gold (excluding stones and beads in the ornament) as per the current market value. Based on the value of gold alone, the loan amount is decided. It can be anywhere between 75% – 85% of the total gold value.
Documentation process – You need to submit a few documents with your application form. This is hassle free as it needs very minimal documents like passport-sized photographs, identity proof and address proof.
Authentication and loan disbursal – The lender authenticates the documents submitted by you. Once approved the loan amount will be disbursed to your bank account.

What are the advantages of opting for a gold loan?

Faster processing – Gold loans neither have strict eligibility criteria nor heavy documentation. This makes it easy for lenders to disburse the loan amount in just a few hours.
Lower interest rate – Gold loans charge a lower rate of interest as compared to personal loans. And if you go for collateral security then the interest rate will be lowered further.
Flexibility in repayment – You can choose from any four repayment methods

EMI method – Monthly you pay a part of principal and interest.
Doing interest payments Quarterly/ Semi-yearly/ Yearly and paying the principal amount at the end of the tenure.
Doing upfront total interest payment and paying the principal amount at the end of the tenure.
Bullet repayment is where at the end of tenure you pay both principal and interest amount.

Income proof is not needed for approval of a loan.
The credit score is not needed for approval of the loan.
Zero processing fees – Most of the banks and NBFCs do not charge processing fees on gold loans and some charge a maximum of 1%.
No foreclosure charges – Banks and NBFCs don’t impose any pre-payment charges or charge 1% as prepayment penalty.

What are the disadvantages of opting for a gold loan?

Lower Loan-to-Value Ratio – This value is lesser for gold loans. Maximum of 90% of the value of the gold value is loan amount. And this is an ideal condition if you are a valued customer to banks else it can be as less as 65% or max 85%.
You can lose your gold – If you are unable to repay the loan amount with interest within the tenure, lenders are legally allowed to freeze your pledged gold and auction it. The excess amount after settling the outstanding gold loan amount is returned to you.
Impact on CIBIL score- When you miss your repayments, your CIBIL score will go down. If you are on time then your rating will go up on credit score.
Only for short tenures – The repayment of gold loans tenure is usually a year or maximum 3 years if it is a big amount.
The approved gold loan amount is directly proportional to the weight and purity of pledged gold – Gold below 18k of purity is not accepted even if it has precious stones like diamond.

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Hallmarking On Gold Jewellery

Sun, 06 Feb 2022 09:54:49 +0000

The Buyt Desk

It is a mandatory purity test for all the registered jewellers to get on the jewellery that they sell. Customers must cross-check the hallmarking whenever they purchase jewellery or precious metal artefacts. Hallmark certificate ensures transparency with regard to the quality of jewellery. The Bureau of India Standard BIS operates the Gold and Silver metal hallmarking in India. Hallmarking is the parameter that determines the accuracy of gold and silver metal. It defines the percentage of precious metal present in the article made from it (Jewellers add some other metals in Gold to make articles made from it durable and long-lasting. The metals like copper add required strength in Gold jewellery, otherwise gold is a delicate material.)

Hallmarking indicates purity in carat as 22K916 stands for 22 carats, 18K750 for 18 carats, 14K750 for 14 carats, and BIS issues hallmarking certificates to all jewellers registered with them. In India, Hallmarking is available for two metals, Gold and Silver.

What Good Hallmarking Does To Gold Jewellery?

For a long time, hallmarking on gold jewellery was voluntary, and most jewellers were not practising it. In 2019, the Government of India announced to make hallmarking on Gold jewellery mandatory. At present, hallmarking is done on 14, 18 and 22 carats jewellery, but the Government is planning to make it mandatory for other purity as well, in a phased manner.

How Is Hallmarking On Gold Jewellery Benefiting Consumers?

The Government’s objective behind making hallmarking mandatory for a jeweller is to avert irregularities in the market. The jewellers used to sell gold articles to customers with wrong carat information. The hallmarking system has created transparency in the system. Hallmarking certifies that the article has the mentioned percentage of Gold in it.

Currently, the Government has given relaxation to a segment of jewellers from mandatory hallmarking. It is not compulsory for small jewellers with a turnover of less than 40 Lakhs per annum. Besides that, the Government has also exempted those jewellers who export and re-export following the trade policy set by the Government. The jewellers who make articles for international exhibitions are also exempted for the time being. A few states have also got an exemption from hallmarking mandatory rules because of the difficult location and unavailability of hallmarking assaying centres. The states are all northeastern states, union territories like Ladakh, Jammu and Kashmir and Andaman and Nicobar.

The hallmarking of gold jewellery is a revolutionary move of the Government to streamline the ecosystem of the industry. Although, the Government is not taking stringent action against jewellers not complying with BIS standards for hallmarking certification. However, it has ensured the citizens of India that any jeweller found cheating customers will be punished by adding a provision of punishment in this fraud.

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Want To Take A Gold Loan?

Thu, 20 Jan 2022 11:46:57 +0000

The Buyt Desk

Gold is considered to be a ‘friend of bad times’. Whenever a person buys gold he/she sees the yellow asset to be valuable in many ways. In India gold has been the easiest way to get a loan as well. Earlier moneylenders, goldsmiths or big shopkeepers used to give loans by pledging gold. But with the passage of time, the nature of gold loan has changed. Now many banks and non-banking financial companies (NBFCs) are giving loans against gold. A gold loan or loan against gold is a secured loan as the borrower keeps the gold as the collateral with the lender. If you are seeking a gold loan here is the whole process-

1. Selection of Bank/ Finance Company

First and foremost you need to finalise the bank or the finance company from where you will take a loan. While deciding upon the institution ensure that they are reputed and a known company or bank. After that you should look for their branches and locate a branch close to your home. Always choose the nearest branch of the bank or finance company as this will make your commute easy.

2. Purity Of Gold

You can get a loan against any form of gold , it could be jewellery, coins or gold bars but the lender will check the gold on the basis of weight and purity. The bank or the organisation giving you the loan will assess the purity of the gold. This is an important step because banks/institutions give loans only on gold of 18 carat and above purity. Loans on gold less than 18 carats are not allowed.Many institutions do not accept coins above 50 grams.Gold ranging from 18K to 24K can only be kept as security for getting a loan.

3. Loan to Valu Ratio (LTV)

Loan to value or LTV is the amount of loan the customer will have as against the value of gold. Based on the purity of the gold, the lender will decide the size of the loan. Usually banks and financial institutions give loans up to 75 percent of the value of gold.During pandemic, Reserve Bank of India had raised this loan to value(LTV) ratio to 90% as well.

4. Minimum Documentation

To apply for a gold loan, you will need an Aadhar card or PAN as an identity proof. Ration card, electricity or telephone bill can be given for address proof. You will have to submit your photographs and some financial institution may ask for income proof. Despite a low CIBIL/ credit score you can get a gold loan as the borrower has to keep gold as the collateral against the loan.

5. Interest Of Gold Loan

The interest on gold loan will vary somewhere between 8 to 18% per annum in public sector banks and private players can charge upto 24% per annum interest. Lenders also charge a 1-3% processing fee for the process. Generally, the lending institutions charge interest every month. At the end of the loan tenure, the principal amount is deposited in a lump sum. Some institutions also offer gold loans on EMI.

6. Tenure of Gold Loan

Gold loans are short term loans. The tenure can vary from one institution to another. The tenure of a gold loan could range from a 3 month to 2 year time period.

7. Loan Amount

The amount of Gold Loan approved for you is directly transferred to your account. Some finance companies give cash amounts up to less than two lakh rupees. The amount above that is directly transferred to the account through NEFT.

8. Gold Auction

Financial institutions impose a penalty for non-payment of interest on time. If interest is not paid for 14 months then they can auction your gold. Before taking such a drastic step, notice is issued to the borrower.

If you are considering taking a gold loan, we hope we have helped you in making an informed decision.

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