RBI takes a big step regarding gold loan, all banks will have to give this answer

RBI action on gold loan : As you know, gold loan covers gold ornaments. It is a type of secured loan in which the lender gives money against the value of gold. You need very few documents to get this type of loan and the processing is easy and quick. Banks and finance companies provide these loan facilities. 

Finance companies and banks have recently sought an answer from the central bank of India. In fact, the Reserve Bank has given three months to banks, finance companies (NBFCs) and banks to improve the rules related to gold loans. 

In this, the central bank (RBI), which regulates banks, has appealed to all financial institutions to expose irregular processes including hiding bad loans. 

RBI has also appealed to catch and remove any shortcomings in their gold loan policy. The Reserve Bank of India has given banks and finance companies a period of three months for this. 

Banks will have to make a plan to re-join the gold loan policy during this time. RBI warned the banks that regulatory action will be taken in case of non-compliance.

What is a gold loan?

As everyone knows, gold loan is a secured loan which is given against pledging of gold assets. In this, banks determine the loan amount on the value of gold. 

The interest rate on gold loan is lower than personal loan, which is the biggest advantage of gold loan. The collateral in gold loan is jewelry, so banks do not need any security. This loan is the safest and easiest to get which fulfills your immediate money requirement. 

RBI took this important decision

RBI has taken a strict stance on this loan against gold (RBI stricy action on banks) because the regulator has found many irregularities in the gold loan operation. 

The gold loan review found that loans are given even after partial payment and top-up loan facility is used without new assessment. These are all the reasons why the Reserve Bank of India has had to do this. 

What are the benefits of a gold loan?

Easy availability

This loan is available to everyone, which is its biggest advantage. Gold loans are available to more people than traditional credit options. 

Gold loans can also be availed by salaried employees, self-employed professionals, or individuals who do not have a good credit record. The only condition is that they must have gold to pledge. 

Gold Loan Repayment Capacity

Another feature of this loan is that it offers a lot of flexibility in repayment. The borrower can choose the repayment period as per their financial situation. You can choose long term or short term loan repayment.

Very low expenses and low interest rates

The gold as collateral in a gold loan often fetches lower interest rates because it is unsecured.