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What is Loans Against Gold ? |
Loan against gold (gold deposits) may be undertaken to obtain an income return on gold. The gold that is placed on loan (or deposit) may be either a financial asset (i.e., monetary gold) or a non- financial asset (i.e., non-monetary gold.) The gold remains on the books of the gold lender, and the lender retains the exposure to the market risk arising from movements in the market price of gold.
Loan against gold (or deposits) are not backed by cash collateral and, in some cases, are not backed by non-cash collateral. However, the gold may be on-sold by the borrower.
The various stages involved are as follows:
- Appraiser appraising the jewelery
- Loan officer informing the amount which can be disbursed.
- Signing of the loan agreement.
- Sealing of the jewels in a plastic pouch.
- Disbursing the loan.
Documents to be submitted are:
- 3 passport sized photograph
- Proof of Identity (Any one of the following): Driving license, Voter’s ID card, Employee ID, Letter from existing Bankers, PAN Card, and Income/Wealth Tax Asstmt. Order, Arms License, Freedom Fighter Pass, Pension Book.
- Proof of Address (Any one of the following): Electricity/Telephone Bill, Letter from employer, Premium receipt - should not be 15 months old, Bank Statement not more than 3 months and to be certified by the Banker Lease/Leave and License agreement, Residential Certificate issued by local bodies.
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