Under bullet repayment, the principal remains outstanding and unpaid interest raises the liability over time. This makes the LTV ratio more vulnerable to a sharp fall in gold prices.
Ask rediffGURU and PF expert Nitin Narkhede your mutual fund and personal finance-related questions.
Lenders are actively monitoring gold price volatility, prompting them to ask borrowers for additional gold collateral or partial principal repayment when loan-to-value (LTV) thresholds are breached, particularly for loans disbursed in February.
The RBI has flagged concerns over rising volatility in gold prices and advised lenders to exercise caution in the gold loan segment.
Gold loan is currently the fastest-growing loan category (among the various types disbursed to individuals). On February 26, 2021, the outstanding loan against gold jewellery stood at Rs 56,596 crore. By February 25, 2022, it had risen to Rs 71,408 crore, a year-on-year growth of 26.2 per cent, according to the Reserve Bank of India's (RBI's) data. Several factors are driving the demand for gold loans.
Only borrow an amount that can be repaid comfortably. The ratio of total EMI to take-home salary should not exceed 40 per cent.
Customers who possess gold jewellery but are either being denied a personal loan or are being asked for a high interest rate due to their poor credit profile may consider a gold loan.
Use these loans to meet emergency needs, and not to fund holidays or luxury purchases.
Gold loans are a quick, easy and low-cost way to meet your immediate and emergency financing needs, but do ensure that you entrust your gold in safe hands after thorough due diligence, suggests Gaurav Gupta, founder and CEO, MyLoanCare.in.
The RBI on Wednesday asked banks to provide an option to jewellery exporters and domestic manufacturers of gold jewellery to repay a part of Gold (metal) Loans (GML) in physical gold. As per the extant instructions, banks authorised to import gold and designated banks participating in Gold Monetisation Scheme, 2015 (GMS) can extend GML to jewellery exporters or domestic manufacturers of gold jewellery. GML are repaid in Indian rupees, equivalent to the value of the yellow metal borrowed.
Those who have binged on credit must spend less, cut discretionary expenses, and focus on repayment.
In addition to interest rates, review the fine print for penalties and repayment terms, and select a reputable lender to avoid harsh recovery practices.
Ask rediffGURU Reetika Sharma your insurance, mutual fund and personal finance-related questions.
'The rise in SIP contributions has created a pool of long-term MF assets that can be pledged for loans.'
'Exploration should be made easier and companies should be given operational flexibility.'
From the financial year 2025-2026, the government has introduced a new column in the tax return form for presumptive taxpayers, requiring them to disclose their year-end investments. This requirement was not present last year.
Ask rediffGURU and PF expert Milind Vadjikar your insurance, stocks, mutual fund and personal finance-related questions.
'If the borrower can't repay the loan due to lack of income or losses from speculative activities, they risk defaulting on it.' 'This could lead to the bank seizing the property.'
Banks and NBFCs are launching festival offers, including lower loan rates, cashback, EMI schemes and GST-linked benefits to tap rising demand ahead of Diwali
If the cashless request is denied, the entire cost may need to be paid for planned treatments.
What if you could have an option apart from personal loan in times of crisis?
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You can get a lumpsum sanctioned, but you may draw only part of it and pay interest on the amount used.
It is not advisable to touch retirement corpus if property is being purchased for investment.
Smart investors fine tune their investments as per the Budget announcements to make the best possible use of tax deductions and other sops.
Those who have been handed the pink slip shouldn't make too many loan queries, advises Raj Khosla.
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To ease the process of decision making while buying a house, we have put together important factors you need to consider.
Also build a contingency fund equal to 9 to 12 months of expenses.
In an online chat with readers on October 14, Anil Rego answered their credit card queries.
'When people who ignored us, when relatives who have not spoken to us for a long time, congratulated us, it was a proud moment for my mother.'
'For years, the RBI has been warning banks on probable frauds in bank guarantees and advised them to exercise due care.' 'PSB staffers feel their jobs are secured, hence there is no need to be vigilant and exercise financial prudence.'
'It made me sad that these people had to spend a minimum of 20 dirhams from the meagre 800 dirhams they get, to pray.' 'God had helped me many times in my life, it was my duty to help these people.' The incredible story of Saji Cherian.
