Gold Loan EMI Plan: Now you may have to pay every month on a gold loan, monthly plans will start soon, know full details

There is important news for those who take gold loans. If you are taking a gold loan, then you may have to make payments every month like a normal loan. After a warning from the Reserve Bank, banks may soon start monthly payment plans. Also, companies are looking for a way of term loans to give loans.

RBI has expressed its displeasure over the shortcomings in giving gold loans. RBI has also given a strict warning to banks and gold loan companies. After this, the industry is now planning to start a monthly plan.

Under this, the company can ask the loan takers to start paying the interest and principal in monthly installments. Loan-giving companies are also exploring the way of term loans to give loans against gold. In such a situation, the loan takers may soon have to start paying the interest and principal through EMIS immediately after loan approval.

No dependence on mortgaged jewelry

According to the Economic Times report, a senior banking official said that RBI wants gold loan companies to check the repayment capacity of the borrower and not rely only on pledged jewelry. That is why we are now preparing a monthly payment plan for gold loans.

What was in the RBI circular?

It is worth noting that RBI had pointed out irregularities in giving loans against gold jewelry in a circular on 30 September. The central bank found problems in matters of sourcing gold loans, valuation, auction transparency, monitoring of LTV ratio, and risk weightage. It also found that advancing gold loans with only partial payment is a wrong practice. As a practice, banks giving gold loans offer the option of bullet repayment gold loans. In this, the borrower can repay the entire amount at the end of the loan period. They do not need to pay any EMI.

Consider a Term Loan

Additionally, lenders are considering using term loans to provide financing secured by gold. Earlier, lenders offering gold loans used to offer bullet repayment options, where the borrower could repay the entire loan amount at the end of the term, instead of following a fixed EMI schedule.

PC:The Economic Times