DEPARTMENT OF MANAGEMENT

TERM PAPER REPORT

TITLE
Gold loan products of different banks

Submitted By:
ROHIT SHARMA

Roll No:
RR-1810A17

Registration No:
10810923(G2)

Submitted To:
MS NEHA SHANDILYA
DEPARTMENT OF MANAGEMENT
LOVELY PROFESSIONAL UNIVERSITY
PHAGWARA (2010)

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 Acknowledgement

I sincerely feel that the credit of this term paper

could not be narrowed to only one individual as the
whole work is outcome of integrated efforts of all
those concerned with it through whose cooperation
and effective guidance I could achieve its
completion.

I wish to place my profound indebtness and deep

sense of obligation to MS NEHA SHANDILYA
Senior lecturer Lovely Professional University for
providing me with the opportunity to work on such
an interesting topic. I also want to pay my
gratitude and sincere thanks to my esteemed mam
for being supportive and lenient during the entire
tenure of this term paper.

When emotions are involved words fail to mean.

My heart full sincere gratitude to my parents, who

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 have supported, encouraged and helped me
throughout my life and academic career.

ROHIT SHARMA

Loan
A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial
assets over time, between the lender and the borrower.

In a loan, the borrower initially receives or borrows an amount of money, called the principal,
from the lender, and is obligated to pay back or repay an equal amount of money to the lender at
a later time. Typically, the money is paid back in regular installments, or partial repayments; in
an annuity, each installment is the same amount. The loan is generally provided at a cost,
referred to as interest on the debt, which provides an incentive for the lender to engage in the
loan. In a legal loan, each of these obligations and restrictions is enforced by contract, which can
also place the borrower under additional restrictions known as loan covenants. Although this
article focuses on monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks for financial institutions. For other
institutions, issuing of debt contracts such as bonds is a typical source of funding.

Types of loans

Secured

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as
collateral for the loan.

A mortgage loan is a very common type of debt instrument, used by many individuals to
purchase housing. In this arrangement, the money is used to purchase the property. The financial

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institution, however, is given security — a lien on the title to the house — until the mortgage is
paid off in full. If the borrower defaults on the loan, the bank would have the legal right to
repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in
much the same way as a mortgage is secured by housing. The duration of the loan period is
considerably shorter — often corresponding to the useful life of the car. There are two types of
auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a
consumer. An indirect auto loan is where a car dealership acts as an intermediary between the
bank or financial institution and the consumer.

A type of loan especially used in limited partnership agreements is the recourse note.

A stock hedge loan is a special type of securities lending whereby the stock of a borrower is
hedged by the lender against loss, using options or other hedging strategies to reduce lender risk

A pre-settlement loan is a non-recourse debt, this is when a monetary loan is given based on the
merit and awardable amount in a lawsuit case. Only certain types of lawsuit cases are eligible for
a pre-settlement loan This is considered a secured non-recourse debt due to the fact that if the
case reaches a verdict in favor of the defendant the loan is forgiven.

Unsecured

Unsecured loans are monetary loans that are not secured against the borrower's assets. These
may be available from financial institutions under many different guises or marketing packages:

• credit card debt

• personal loans
• bank overdrafts
• credit facilities or lines of credit
• corporate bonds

The interest rates applicable to these different forms may vary depending on the lender and the
borrower. These may or may not be regulated by law. In the United Kingdom, when applied to
individuals, these may come under the Consumer Credit Act 1974.

Demand

Demand loans are short term loans that are atypical in that they do not have fixed dates for
repayment and carry a floating interest rate which varies according to the prime rate. They can be
"called" for repayment by the lending institution at any time. Demand loans may be unsecured or
secured.

Loan payment

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The most typical loan payment type is the fully amortizing payment in which each monthly rate
has the same value overtime.

The fixed monthly payment P for a loan of L for n months and a monthly interest rate c is:

Abuses in lending

Predatory lending is one form of abuse in the granting of loans. It usually involves granting a
loan in order to put the borrower in a position that one can gain advantage over him or her.
Where the moneylender is not authorized, they could be considered a loan shark.

Usury is a different form of abuse, where the lender charges excessive interest. In different time
periods and cultures the acceptable interest rate has varied, from no interest at all to unlimited
interest rates. Credit card companies in some countries have been accused by consumer
organisations of lending at usurious interest rates and making money out of frivolous "extra
charges".

Abuses can also take place in the form of the customer abusing the lender by not repaying the
loan or with intent to defraud the lender.

Income from discharge of indebtedness

Although a loan does not start out as income to the borrower, it becomes income to the borrower
if the borrower is discharged of indebtedness. Thus, if a debt is discharged, then the borrower
essentially has received income equal to the amount of the indebtedness. The Internal Revenue
Code lists “Income from Discharge of Indebtedness” in Section 62(a)(12) as a source of gross
income.

Gold Loans

Gold prices are close to an all time high. Is this a good time to unlock the value of your holdings
in Gold and take a Loan Against Gold. If you are in need of Gold, you might be able to borrow
against it. Here we explain to you the basics of Gold Loans. Many people have assets such as
Gold ornaments and jewellery that earn no income because they lie idle at home or in a locker. If
you are in need of a loan, and if you are confident of your ability to repay the loan on time, you
can unlock the value of these assets by taking a Loan against Gold.

You offer the lender your Gold. The lender gives you a loan against your ornaments after a quick
evaluation of its purity. The lender will usually not give you the loan up to the full value of the
loan, but generally you can get up to 80% of the value. You pay interest on the loan. At the end
of the loan, you repay the loan and can take your Gold back from the lender.

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Criteria for getting Gold Loan

You can get a Gold Loan through either your bank or through a non-banking company that
specializes in Loans Against Gold.

If you go to a bank like HDFC or ICICI, you will be asked to produce back-up documentation
related to your ID and other personal details. The process, as advertised, can take up to 1 hour.
You might need to prove that the Gold is owned by you.

If you go to a non-banking company such as Muthoot or Mannupuram, the process can be as

quick as a few minutes according to what these companies advertise. The documentation
required is usually less than what banks will demand. Because the process is less rigorous,
especially because these lenders do not review if you have creditworthiness, they charge a higher
rate of interest than the banks.

Risk that Gold prices will move up or down

As you have probably seen in the media, Gold prices are at an all time high (in nominal terms),
and are expected to go higher. However, you face no risk if there is a price movement during the
time your loan is outstanding. As long as you pay your loan back on time, you will get your Gold
ornaments back, exactly in the same state and weight that you gave at the time you took a loan.

Typically, your Gold is safe with the lender. Most of these lenders come under strict regulatory
supervision from the RBI. Go with a lender that has been around for a while, not just any upstart
lender.

THINGS NEEDED FOR GETTING GOLD LOAN

Money lenders are always looking for the best clients to lend their money to. But what sorts of
things do they look for in a company? This is where the 5 C's of Credit comes in - character,
capacity, capital, conditions, and collateral.

Character
The character is the client's reputation and reliability. Are you trustworthy enough to repay the
loan? Things associated with your character include your business experience and knowledge,
references and education, and personal and/or business credit history.

Capacity
Is your company able to repay the amount borrowed? Your company's cash flow will be
reviewed, and how you intend to repay the loan is established. Payment history and records on
other credit relations will be looked at and considered. These include both personal and
commercial.

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Capital
How much money have you invested into your business? The amount of your own money put
into the company portrays a message of confidence and trust. It shows that you have taken the
risk of funding the company, so the lender knows it is safe to do the same.

Conditions
How well is your business currently faring? What will the loan be used for? Is it for equipment,
expansion, or just for financial security? Things such as the economy, competition, and customer
base are noted.

Collateral
If for some reason you cannot provide repayment, collateral will be a secondary source of
repayment. Collateral can include things such as inventory, equipment, real estate, stocks,
accounts receivable, etc. Usually a signed contract is needed as a guarantee.

When you go to a bank or financial lending institution there are 5 key things they will take into
consideration before approving a loan. These "5 Cs" apply to both personal and business loans.
Since the bank or lending institution are in business to make money, they take these 5 things very
seriously and you will want to be prepared before applying for a business loan. The 5 C's in no
particular order are capital, collateral, conditions, character, and capacity. Here we will deal
specifically how they apply to a business loan.

Capital is the money you personally have invested or will invest in the business. When applying
for a business loan the prospective lender wants to see what kind of risk are you willing to make
to see this business succeed The more you personally have invested in the business the more
likely you are to work your hardest to make sure the business is a success. If you are not willing
or prepared to make a sizable financial investment in the company, more than likely the lender
will not be willing to take a risk either. If your business is already operating you will be asked to
provide personal and business records showing every detail of the business including tax records,
accounts payable, and accounts receivable.

Collateral is personal and or business assets that you are willing to put up as security in the
event the business cannot repay its loan. The bank wants to know there is a second source of
repayment. Equipment, buildings, accounts receivable, and in some cases, inventory is
considered possible sources of repayment of the business loan, anything the bank can sell for
cash. Both business and personal assets can be sources of collateral for a business loan.
Collateral should not be confused with a guarantee. A guarantee is when someone else signs a
guarantee document promising to repay the loan if you can't. Some lenders may require both
collateral and a guarantee as security for a business loan.

Conditions refer to the purpose of the business loan. Will the money be used for working
capital, additional equipment, or inventory? Other conditions the lender will consider are the

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economy and conditions not only within your business but also in businesses that could affect
your business (your suppliers and or service companies included).

Character is the impression you make on the potential lender. The lender determines whether or
not you can be trusted to repay the business loan if granted. Some of the things the lender might
ask for are your educational background, your experience in business and in your industry. More
than likely they will request references for you and the background and experience of your
employees may also be considered.

Capacity to repay the business loan is the most important of the five factors. The prospective
lender will want to know exactly how you intend to repay the loan. The lender will consider the
cash flow from the business, the timing of the repayment, and the probability of successful
repayment of the loan. Payment history on other credit relationships, personal and business, is
considered an indicator of future payment performance. A business must be able to pay all its
debts, not just its loan payments, as they come due. Applicants are generally required to provide
a report on when their income will become cash and when their expenses must be paid. This
report is usually in the form of a cash flow projection, broken down on a monthly basis, and
covering the first annual period after the loan is received.Before applying for a business loan
keep the 5 Cs in mind and be prepared. Taking time to organize, have your plans in writing, and
a positive attitude will take you great steps towards receiving the financial backing you are
seeking for your business

Must know facts before taking a GOLD LOAN…..

Current gold prices are sky rocketing and so is the time to pledge gold (jewelry) to get short term
loans to fulfill your needs. So, we at deal4loans are bringing to your notice all there is to know
before you undertake such a loan.

Players: There are a host of financial service companies (including banks like HDFC Bank,
ICICI Bank, State Bank of India and its associates, Allahabad Bank, Development Credit Bank,
etc.) which offer ‘Loans against Gold’ at different interest rates. Non-banking financial
companies or NBFCs (like Manipuri Finance and Muthoot Group), cannot take deposits of
money from the public but can give loans. Various co-operative banks also offer these loans.
Select branches of banks offer loans against gold jewelry. Small branches, which do not have
huge storage space, wouldn’t be offering loan against gold. So please confirm.

Rate of Interest: The interest rate ranges anywhere from 12.5% to 33.6%. The rate of interest
charges on loan against gold is lower than that of personal loans. For instance, a PSB charges

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18% interest on personal loan but 15.75% on gold loans while other charges 14.5-16.5% (on
personal loans) and 12.5% (for loans against gold jewelry). But, Loans from NBFCs are costlier
than any bank. Some NBFCs extend loans at a fixed rate of 33.6%. The huge difference in the
rates charged is remarkable!

Interest rate varies due to the quality of gold jewelry. Hallmarked jewelry, (with ‘BIS’ stamp)
certifies its purity. Interest charged will be lower on non-hallmarked jewelry. The difference
could also be on the basis of carats of gold, whether 22 or 18, etc.

Quality/Purity: Pure gold is available only in the form of gold coins and bars, as jewelry can not
be made of pure gold. Gold coins and bars can’t be pledged for loans as people have attachment
to their jewelry and not coins and bars. If value of gold falls below the loans amount a person
would not return for bars and coins but jewelry because of his/her attachment (as jewelry could
be grandmother’s or mother’s).

The loan amount would be lower than the worth of the jewelry even if it is hallmarked or of
utmost quality.

Gold Prices & its Calculation/Computation: The current gold price is close to Rs.17000 for 10
grams but this is not considered by all banks or even NBFCs. Each bank has different methods of
calculating the value of jewelry pledged. Some banks fix the consideration price at a level (say
Rs 1,005-1,215 per gram) for about 6-12 months and revise it only a year later, no matter what
the actual market price of gold in the international markets is while others take an average of two
weeks’ market price and value the jewelry to that extent. Some even look at the day’s
international trading price and offer a loan considering the value of gold on that price. This is
because of the fluctuation of the gold prices. They have to keep margins due to purity issues as it
is very easy to cheat on purity in current scenario.

Loan Amount: The method of calculation of the price of gold can make vast difference to the
loan amount eligibility. It could be 5-10% of the loan amount! The tenure of the loan and the
frequency of repayment are the other factors affecting the amount of loan.

To conclude…..

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Enquire, compare and take your time before taking a loan. How much is offered by banks or
NBFC per gram and whether it is after deduction of processing fees etc.? Find out IF the loan
amount will fulfill your need. Select branches of banks which offer loans against gold jewelry.
Then GO FOR IT…

Gold loans: Best for urgent money needs

There is always a situation when money needs to be arranged for at short notice. It could be a
medical emergency or time to pay off an urgent debt.Whatever the need may be, is it possible to
get a loan instantly, without having to submit reams of documents and waiting for an approval?

MORTGAGE

You can mortgage gold with any bank, with the minimum of paperwork and walk out with the
money almost immediately. Some banks claim to process gold loans in three minutes, while most
banks hand you the money within an hour!

With the prices of gold rising, banks consider it a safe deal to offer gold loans. You can get up to
60% of the value of your gold. No documents are required, making it a quicker process. At most,
some banks might require a no-objection certificate from the lady of the house, as in Indiagold
jewellary is traditionally considered 'stree-dhan'.

Gold loans typically are for the duration of one year, and can be foreclosed at any time. Banks
charge an interest of 10% to 12% on gold loans, and your liability is to pay the interest on a
monthly or quarterly basis -- no EMIs to pay or worry about.

The jewellery is released by the bank when the total amount due to the bank is realised. In case
you have not been paying the interest on time, an additional penal interest of 2% may be charged
by the bank.

One of the most convenient features of a gold loan, apart from it being immediate, is that you
need not have a source of income to avail a loan.

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Hence, home-makers with no source of income, or people who may normally not be eligible for
loans can mortgage their jewellery to raise funds.

Salient features:

• No documents required.
• No source of income necessary.
• Hassle-free, immediate disbursal.
• No EMIs to worry about.
• Amount of loan can be as high as Rs 10,00,000, depending on the bank.

The process:

You can walk into your bank and declare to the manager or the loan department that you wish to
avail a gold loan. You will be required to fill up a simple form, and the bank will evaluate your
jewellery.

The bank will either have a jeweller visit the branch for the same, or you may be required to
accompany a bank official to the jeweller for the purpose of evaluation.

The charge for evaluation is generally borne by you, and ranges from Rs 100 to Rs 250.

Once the jewellery has been evaluated, you need to provide a stamp paper to the bank for the
purpose of mortgage. Stamp charges vary according to the amount of the loan.

That's it! The amount of loan will be disbursed into your account with the bank and you are free
to make withdrawals. Your urgent need is taken care of, and your jewellery is safe with the bank!

1. STATE BANK OF HYDERABAD

THINGS NEEDED FOR GOLD LOAN

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  Application form
 2 passport size photographs
 Copy of the income tax return for last 2 financial years duly acknowledged by
ITO.
 Latest salary slip showing all deductions.
 TDS Certificate – Form 16 in the case of salaried persons
 If property offered is an agricultural land converted as non-agricultural, copy of
the relative order should be made available.
 In the case of agriculturist a certificate of income issued by the village officer
should be produced.
 In the case of individuals engaged in trade/industry etc. wherever latest IT returns
are not available, the annual income can be assessment based on the IT return for
the preceding year and the last balance sheet

Documents to be submitted

• Title deeds of the property proposed to be given as security.

• Prior title deeds.
• Latest tax receipts (both building and land)
• Possession Certificate
• Encumbrance certificate from the sub registrar for the last 15 years.
• After availment of the loan, encumbrance certificate for 4 months after the date of
mortgage is to be produced.

Against deposits Cash Key Facility

Gold Loans Conventional Liquid Gold
Against scrips Mitra Varsha
HOME CASH
Housing Loan Sahaya
Home Decor Loan Education
Varsha Computer Loan Car
Personal Loans loan Suvidha Loan
Loan Two Wheeler
Prasanthi Loan
Loan
Prasanthi Elite

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Cash Key facility

• The most convenient method of obtaining advance against deposits.

• Unlimited withdrawals permitted in a Current account upto 90% of the deposit amount
and interest accrued.
• Cheque book facility is available.
• Interest charged on these loans will be 1% above the interest rate allowed on the deposit
irrespective of the amount, rate of interest and period

With state bank of Hyderabad Bank's Gold Loan, you can get an instant loan against your gold
jewellery and ornaments. The procedure is simple, documentation is minimal and approval is
quick.

Features & Benefits

Avail Loan up to Rs.10,00,000 & up to 85% of value for any purpose*

Safety & Security of your Gold Jewellery
Loan processed in 30 Minutes
ATL - Anytime Liquidity
No EMI, Service only Interest and enjoy the Loan facility
Lower Interest Rates - Your savings can be Invested in several Investment Avenues
If you are an SBT Bank customer, we have special rates for you

2. Citi bank

Features of gold loan product;

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Credit limit: You can have a credit limit of up to three times your net monthly income. The gold
Citi credit card has a maximum credit limit CZK 600,000 and the classic Citi credit card has a
maximum limit of CZK 150,000.

The ability to purchase now and repay gradually

Without having to save for a long time, you can finally buy what you have been wanting for a
long time. You can buy it now and repay later in the way most convenient for you, either all at
once or through regular payments. If you decide to pay in regular payments, you do not have to
pay the same amount every month – you can decide how much to pay. The minimum monthly
payment is only 3.2 percent of the total balance on your credit card in any month.

Interest-free Loan for up to 55 Days

If you repay the entire amount due in the current month, you receive an interest-free loan for up
to 55 days. How is it possible? If you make a purchase at the beginning of the period, you will
receive an credit card statement in 30 days. If you send your payment within the 25 day
repayment period, you received an interest-free loan for the purchase for 55 days free of charge.

A universally-accepted

The Citi credit card is accepted in more than 48,000 stores in the Czech Republic and their
number increases daily. You can also use your card in more than 25 million stores around the
world. If you need access to cash, there are more than 2,700 ATM machines in the Czech
Republic and 600,000 ATM machines abroad. Just look for the MasterCard logo.

Gold loan features

Key features

• 1.9% p.a. on balance transfers for 9 months

• 55 days interest free
• Complementary rewards program
• Complementary international travel insurance
• Complementary purchase cover insurance

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 • Access to Citibank World Privileges
• Generous credit limit of up to $25000

Pros

• 1.9% balance transfer

• 55 interest free days
• Free travel insurance
• Free rewards program

Cons

• Fairly high annual fee

• and purchase rate

 ELIGIBILITY
• Any individual within the age group of 18 to 75 years is eligible
 Minimum and maximum loan amount
• Minimum individual loan amount:Rs. 5,000/-
• Maximum individual loan amount:Rs. 15, 00,000/-
 Loan tenor option; the tenor is 45 days, 12 months & 24 months.
 Interest rate;
• Citi Bank Loan against Gold jewellery comes to you at attractive interest rates and are
based on the prevailing situation in the market at the time of the loan. The rates vary
according to the product variant
 Documents needed
• 3 passport size photograph
• Proof of Identity
• Proof of Address

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Account
No. For availing Loan against Gold Ornaments facility you do not require to have account with
ICICI bank. New account opening is also not required.
Guarantor
No. There is no need of Guarantor or Introducer for availing Loan Against Gold Ornaments
facility from ICICI bank.
Interest
The interest rate is fixed & is calculated on the reducing balance.
Additional fee
Yes, there is nominal processing fees ,which will be charged to you.

 Approval
Normally takes 20 -25 minutes approximately for the loan to be disbursed.
 Repayment
Yes, (Thereon, interest will be charged on reducing balance).You can make part-payment but the
jewels will be released only after the principal amount and interest payment is done.
 Prepayment
Yes, the loan can be prepaid; there is a prepayment charges of 0.50% of the loan amount if the
loan is prepaid within three months.
 Repayment
You can repay the loan by cash, DD or Account transfer.
 Charges levied for late payment
Yes, 2% penal interest on outstanding interest amount
 Gold jewellery auctioned
The auction process would have to take place 3 months after the due date of repayment has
passed.
Approach
You can approach us in any of the following ways

1. Call us at our 24 hour customer care center

2. Write to us using the "Email Us" option

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 Latest Offers: Citibank Gold

• 1.9%p.a. for 9 months on balance transfers¹

• Generous credit limit of $25,0008

• Complimentary Rewards Programme

For every dollar you spend, you enjoy one reward point which can be redeemed for a large
range of travel rewards, merchandise, gift cards or cash back on your card. In addition,
your reward points never expire while the card remains open.

• Complimentary International Travel Insurance

automatically covers you and your family when you buy your travel tickets with your
Citibank Gold Card. Your cover includes medical and unexpected travel expenses, trip
cancellation, personal liability and loss or damage to personal items.

• Citibank World Privileges

it’s your passport to exclusive upgrades, benefits and discounts at thousands of hotels,
restaurants, shops, shows and services worldwide. With everything from glorious
weekends away to sumptuous dinners in Australia's finest restaurants, you'll find
something to tempt you.

• Up to 55 days interest free on retail purchases

Terms & Conditions

Subject to your acceptance you will be billed an annual account fee which is currently $149 for
the Primary Citibank Gold card, and $30 for an Additional Citibank Gold card.

1. The 1.9% p.a. interest rate applies only to balances transferred with this offer for a period of 9
months. Transferred balances will be repaid first. Any transactions made other than with this
offer are at the standard Credit Card rate. The standard Citi Gold credit card rate is currently
20.49%p.a, which is variable, subject to change and Citibank's credit criteria. Interest rates last
updated 7/03/2010.

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2. International Travel Insurance and Purchase Cover is underwritten by Zurich Australian
Insurance Ltd (ABN 13 000 296 640 AFSL No. 232507) and is subject to the Terms and
Conditions and exclusions contained in the Policy of Insurance. Please refer to the Terms and
Conditions sent to you at card opening for a full explanation of cover and exclusions.

3. Rewards are subject to the Citibank Rewards Terms and Conditions. Reward points are not
earned on balance transfers or cash advances. Reward points never expire while the card remains
open. Effective 1 April 2009 Citibank Cardholders will no longer be able to redeem Citi Reward
points for Qantas Frequent Flyer points as part of the existing Citi Rewards program. Customers
can continue to redeem Citi Reward points for Qantas Frequent Flyer points on the existing Citi
Rewards program until 31 March 2009. A Citibank Credit Cardholder must be a member of the
Qantas Frequent Flyer program to redeem Reward points for Qantas Frequent Flyer (QFF)
points. A joining fee applies. Membership of the QFF program is subject to Qantas Frequent
Flyer Terms and Conditions. Gold Cardholders can redeem Reward points at a rate of 1 Reward
point for 1 QFF point, Silver Cardholders can redeem Reward points at a rate of 2 Reward point
for 1 QFF point. All redemption requests must be in blocks of 10,000 Reward points.

4. Citibank World Privileges - payment must be made using Citibank Credit Cards. Privileges
cannot be used in conjunction with any other promotional programs or offers. Citibank and the
business establishment reserve the right to change the terms and conditions at any time. Refer to
worldprivileges.citibank.com for up to date offer details.

5. Purchase Cover is underwritten by Zurich Australia Insurance Ltd (ABN 13 000 296 640
AFSL No. 232507) and is subject to the Terms and Conditions and exclusions contained in the
Policy of Insurance. Please refer to the Terms and Conditions sent to you at card opening for a
full explanation of cover and exclusions. Please refer to the Terms and Conditions for a full
explanation of cover and exclusions.

6.Actual credit limit will be assigned based on Citibank's credit criteria

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3. Andhra bank

 Purpose

To purchase Gold/Gold Ornaments

 Eligibility

• Women permanently employed in Central/State Govt Offices, PSU’s, Reputed Limited

Cos, Teaching & Non – Teaching Staff, Lecturers, Professors and Employees of
Colleges, Universities.
• Professional & Self employed women like Doctors, Lawyers, Chartered Accountants and
Agents etc who are having proven Income supported by Income Tax Returns/ Income
Tax assessment under Non-Working Women including Housewives.

 Quantum of Finance

Minimum Rs. 20,000/-

Maximum Rs. 2, 00,000/-

 Margin

15% of the value of Gold /Gold Ornament to be purchased.

 Co-Obligation

Co-obligation can be from any suitable third party including husband/father – employed or
having proven income by way of Income tax return/ income tax assessment.

 Security

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 A. Hypothecation of Gold/Gold Ornament to be purchased
B. Collateral Security:
In case of Working Women,

• No security is required for loans upto and inclusive of Rs. 50,000/-.

• Loans exceeding Rs. 50,000/- by way of eligible immovable property and tangible
securities like NSC/KVP/ LIC Policies (Surrender Value)/Govt. Bonds/ Term Deposits of
Andhra Bank in the name of the applicant / co-obligant.

In case of Non-Working Women & Housewives:

• Collateral security is waived upto Rs. 50,000/- as in the case of working women provided
the co-obligant is husband/ father either employed or having proven income supported by
Income Tax Return/ Income Tax assessment subject to fulfillment of the following
conditions:

In case of employed Husband/father as co-obligant: Net take home pay of the co-obligant should
not be less than 40% of his gross pay after taking into account the proposed instalment.In case of
Third Party Co-obligant: Collateral security waiver is not allowed even the loan amount is below
Rs. 50,000/-

 Repayment

Repayable in 60 EMI

 Disbursement

Payable directly to the jewelers by Demand Draft/ Pay Order or by reimbursement on production
of original Bill.

 Nature of Loan………Term Loan

20
4. Yes bank

With yes Bank's Gold Loan, you can get an instant loan against your gold jewellery and
ornaments. The procedure is simple, documentation is minimal and approval is quick.

 Features & Benefits –

• Avail Loan up to Rs.10, 00,000 & up to 80% of value for any purpose

• Safety & Security of your Gold Jewellary

• Loan processed in 30 Minutes

• ATL - Anytime Liquidity

• No EMI, Service only Interest and enjoy the Loan facility

• Lower Interest Rates - Your savings can be Invested in several Investment Avenues

 Eligibility & Documentation -

• You may be a salaried individual, professional or a businessman, we have loan designed

to suit your requirement. All you need is fill a application form and you get loan in 30
minutes.

 Eligibility Criteria -

• Maximum age of Applicant at loan application should not be more than 65 years

• Gold Jewellary should be owned by you or any of the family member.

 Documents Required -

• Proof of Identity (Passport Copy/ Voters ID card/ Driving License).

• Address Proof (Ration card/ Tel, Electricity. Bill/ Rental Agr. / Passport copy/Trade
license /Shop & Est. License./Sales Tax certificate).

• Signature Proof (Passport Copy/Driving License/Banker's verification/cheque)

21
 • Passport size photographs.

Benefits of having an Account with the yes Bank

You get preferred interest rates, priority processing and simpler documentation if you have an
Account with yes Bank. This is taken into account at the time of disbursal of the loan.

The main advantage of yes Gold Loan is that, you don’t require any Income proof to get this
loan. Even if you fall under the low Income class, you can get Gold Loan. The only thing you
should have is Gold.

Taking a yes Gold Loan

The YES BANK International Gold and Silver Debit Cards give you the recognition and
flexibility to carry your account with you, wherever you go. Launched in partnership with
MasterCard International, this global card gives you unparalleled access to withdraw cash from
innumerable ATMs and can be used to make cashless purchases in millions of establishments
worldwide. With enhanced withdrawal and purchase limits, unique value added services and
easy hot-listing services, your YES BANK Debit Card is one of the most power-packed debit
cards in the country.

Your YES BANK Debit Card has now become e-convenient. You can now also shop online
from the comforts of your home across every category including Apparels, Hotels, Gifts,
Florists, Electronics, Lifestyle goods, Consumer goods, etc, all with your YES BANK Debit
Card. And what’s more, be assured of the safety of your transaction each time you purchase
online.

Steps!

Step 1: Choose ‘YES BANK’ in the ‘Pay by Credit Card’ option of the Payments section, once
you have finished shopping on any e-commerce website. You will be asked to enter your card
details. Post keying in the same, the relevant facility will be displayed to you for completing your
Registration process.

Step 2: Key in a “Personal message” that will help you confirm the authenticity of your
transaction each time you shop online. Then select your ‘Hint question’ from the dropdown list
and answer the same.

22
Step 3: Create your own password (i.e., your very own “YES BANK MasterCard SecureCode”)
to authenticate your current online payment / transaction. This password will be used to
authenticate your future online transactions.

Step 4: Complete the Registration process by accepting the Terms & Conditions displayed.

Once your Master Card Secure Code is generated, you are ready to shop online with your YES
BANK Debit Card. Do ensure that you always keep this Code handy for future reference. Get
clicking with your YES BANK Debit Card today!

Terms and Conditions

Benefits and Features

• The YES GOLD Debit Card is the 1st Indian debit card to offer 0% surcharge on petrol
purchase transactions at any petrol pump. Get instant savings of up to 2.5% of the value
of all petroleum transactions
• Daily cash withdrawal limit increased to INR 75,000 on Gold and INR 25,000 on Silver
debit cards.
• FREE cash withdrawals on GOLD Debit Cards from ATMs displaying the MasterCard,
Maestro, Cirrus, NFS and Cash Tree logos worldwide
• Daily purchase limit increased to INR 75,000 on Gold and INR 25,000 on Silver debit
cards from any merchant establishment displaying the MasterCard logo
• Personal Accident Insurance* upto INR 200,000 on Gold and upto INR 100,000 on
Silver Debit Card. Know more.
• Purchase Protection Insurance* upto INR 50,000 on Gold Card and upto INR 25,000 on
Silver Card. All purchases will be indemnified against any damage caused by fire,
burglary and or theft upto 90 days from the date of purchase. Know more.
• Lost Card Liability Protection* – your YES BANK debit card is safer than cash. If your
card is lost and you haven’t made a purchase transaction, you don’t need to pay for it.
You are now safe for transactions made on your debit cards upto 7 days prior to reporting
the loss to YES BANK. However, for your safety we recommend that you report the loss
immediately. This insurance is valid for all transactions done at merchant outlets without

23
 the use of PIN only. This facility does not cover cash withdrawal transactions at ATMs.
Know more.
• Special offers on travel, lifestyle and fine dining. Refer your account statements for
regular updates.
• Instant updation of your account to reflect your debit card transactions.
• International transactions are always reflected in Indian Rupees

Usage Instructions

• You can access your account for FREE at over 35,000 MasterCard, CashTree and NFS
ATMs across the country
• To access an ATM, you need to use your unique four digit Personal Identification
Number (PIN) in conjunction with the card
• You are advised never to disclose your card number or PIN to any individual
• If your card is lost or stolen, please report it immediately by contacting us at below
details:
• All payments on the reported stolen card will be blocked from the moment we
acknowledge the lost or stolen status of the card.
• Use your card to make cashless payments from your account at any establishment that
displays a MasterCard logo. At an electronic terminal, your card works just like a credit
card. Present your Debit Card to the merchant, who will swipe the card at the terminal
and present you with a transaction slip. Please sign the transaction slip. Your account will
be instantly updated to reflect the amount of the purchase

New schemes
Eligibility under the Schemes

• Exporters with minimum rating of ‘BB’ as per risk rating module or ‘A’
based on seven pricing parameters will be eligible under this scheme.
• Exporters whose accounts have been classified as ‘Standard’ continuously
for a period of three years and there are no irregularities/adverse features
in the conduct of the accounts will be considered.
• The scheme will not be applicable to those exporters who are blacklisted

24
 by ECGC or included in RBI’s defaulter’s list/caution list or making losses
for the past 3 years or having overdue export bills in excess of 10 per cent
of the current year’s turnover.
• In order to recognize exporters undertaking exports on collection basis, it
has been decided that they will also be considered for grant of yes bank
Expo Gold Card under the above scheme provided they have been dealing
with our bank for a period of atleast three years.

Fixation of Credit Limit

• In-principle limits will be sanctioned for a period of three years with a

provision for automatic renewal under this scheme subject to fulfilment of
the terms and conditions of sanction.
• Efforts will be made to meet yes bank requirements of the Gold Card
holders by giving them priority over non-export borrowers. Bank will also
consider providing foreign currency term loans to Gold Card Holders on
priority basis.
• The maximum time frame for disposal of applications received for
sanction of export credit under the scheme will be as under: -
• For disposal of fresh applications 25 days
Renewal/ Review of limits 15 day
• Sanction of ad hoc limits 07 days
• A stand-by limit of 20% of the assessed limit can be additionally made
available to meet urgent credit needs of Gold Card Holders.
• It has been decided that Gold Card Holders will submit their request for
sanction/renewal of credit limits in the simplified application form
(enclosed).
• The performance of the exporters is to be reviewed on yearly basis vis-à-
vis their projections with a view to decide whether benefits of better terms
and conditions given to Gold Card Holder are to be
continued/amended/withdrawn.

25
 Rate of Interest/Service Charges

• Relaxation in interest rates upto 0.25% on rupee export credit based on the
credit ratings of the exporters. The concessional rate of interest applicable
upto 90 days on post-shipment rupee export credit will be extended upto
365 days.
• Bank will offer discount of 10% in charges and fee structure for various
services/transactions.
• Export credit in foreign currency will be provided on priority basis at
LIBOR + 0.75% per annum with service charges at the flat rate of 0.1%
for each disbursement. Bank will also consider providing foreign currency
term loans to these exporters on priority basis.

Tenure

• The card will be issued for 3 years and will be renewed automatically for a
further period of 3 years unless there are adverse features/irregularities in
the account. Further, bank will have right to recall the card at any time in
case of any misuse of the card or observance of any violation of the terms
and conditions.

5. MY PRODUCT

Features of my product

Our Gold loan Scheme can help you encash on the gold / jewellery that you have already
invested in to pledge it with the bank and avail loan on the same. The terms and conditions are
simple and documentation is easy. Even the interest rates are down to earth.

 Purpose

26
Agriculture & Allied activities and General purpose. An overdraft account against pledge of 22
carat gold ornaments.

 Eligibility

The following are eligible to acquire this loan: Individuals, Partnership & Proprietary Firms. Any
Individual who is competent to enter into a valid contract and to create pledge except financiers,
jewelers, & jewellary shop owners.

 Amount Permissible

Rs.1025/- per gram for Hall marked jewels; Rs.1000/- per gram for Non-Hall Jewels or 80% of
appraiser / market value whichever is less. In case, the market rate of Gold falls below Rs 1250/-
per gram, the maximum amount of advance per gram will be Rs 925/- per gram and Rs 950/- per
gram for Jewels and Hall Marked Jewels respectively.

 Part Release

Not Permitted.

 Loan Quantum

. A minimum of Rs. 25,000 and

Maximum of Rs.10 lakhs.

 Nature of Limit

Overdraft. Facility to draw with ATM card is permitted and optional. At any point of time, a
customer should have one GOLD OD account only.

 Period of Loan

Two years.

 Repayment

Within a period of 12 months. The loan can be renewed after paying interest

27
  Primary Security

Gold Jewels and Gold Coins (excluding repledge). Condition: Weight and value of the Precious
stones embedded in the Gold Jewels should be disregarded.

 Rate of Interest

• HM - Hall Mark Jewellery, Non HM - Non Hall Mark Jewellery

• For Agricultural Purpose (HM / Non HM) Upto Rs. 50,000.00 - PLR - 3.00% (11.00%
p.a.).
• For Agricultural Purpose (HM / Non HM) above Rs. 50,000.00 - PLR - 2.25% (11.75%
p.a.).
• For General Purpose (HM) Upto Rs. 2,00,000.00 - PLR - 2.50% (11.50% p.a.).
• For General Purpose (HM) above Rs. 2,00,000.00 - PLR - 1.50% (12.50% p.a.).
• For General Purpose (Non HM) Upto Rs. 2,00,000.00 - PLR - 2.25% (11.75% p.a.).
• For General Purpose (Non HM) above Rs. 2,00,000.00 - PLR - 1.25% (12.75% p.a.).
• Current Prime Lending Rate (PLR) is 14.00% p.a.

 Minimum Interest

• For Agricultural Purpose Rs. 90.00.

• For General Purpose Rs. 125.00.
• Minimum 15 days interest for the OD Limit or Above whichever is higher.

 Jewel Appraiser Charges

Rs. 4.00 per thousand subject to a maximum of Rs. 100.00

 ATM Card Charges

Nil - It's Free...

 Penal Interest

Any irregularity or default in repayment will attract penal interest of 2.00% p.a. over and above
the above rate of interest on the balance outstanding.

 Processing Charges

• Term Loan: 1.00% of Limit sanctioned without any maximum cap.

• Working Capital [Fund and Non-Fund Based]: 0.50% of the loan amount without
maximum cap.

 Operational Procedures

28
Including Servicing of Interest, Folio Charges, etc. - as per extant procedures applicable to
Overdraft facility.

 Documentation

As applicable to the existing Agriculture Jewel / Ordinary Jewel loans plus OD continuity letter
All the above Terms and Conditions are subject to change and sanctioning of the loans is at the
sole discretion of the Bank. Service Tax on All Service Charges extra wherever applicable.

 Interest Rate

BPLR - 2.25% fixed with floor level of 12.00%.

 Rate per gram – changes from time to time.

 Special Features –

Ornaments under safe custody of the Bank, Liquidity of the gold is ensured by sanctioning an
overdraft under pledge of ornaments, Availability of the ornaments for use at any time with
provision for release of the ornaments & re-deposit of the ornaments without any restrictions.

 Gold Rush
 Quantum of loan - Minimum of Rs.10, 000.
 Term of loan - 12 months.
 Interest Rate - BPLR - 2.00% p.a
 Minimum Interest : Minimum for 5 days or Rs. 50/- whichever is higher.Rate per gram
changes periodically.

Types of Gold Loans offered by us;

 Conventional

29
 • Loans against Gold ornaments.
• Rs.1100 per gram of gold for all types of jewellery (including hall marked jewellery).
• Amount of Loan - Maximum 10 lacs
• Period of loan - 6/12 months and can be further renewed
• Simple easy documentation.

 Liquid gold - Gold overdraft

• Overdraft facility against pledge of Gold ornaments, operated as a running account with
facility of cheque book.
• Rs.1100 per gram of gold for all types of jewellery (including Hall marked jewellery)
• Amount of Loan - Maximum 10 lacs
• Loans are granted for 6/12 months and can be further renewed

COMPARISON
COMPARISON OF FEATURES OF GOLD LOAN OF THESE BANKS

Category Citi Andhra State bank of Yes bank My product

ba ban
nk k Hyderabad
Purpose Loan Gold Gold ornaments Jewellary/gol General
ag orna d purpose
ain men orname
st t nts
je
wel
lar
y

30
Eligibility 18-75 Employee Employees/busines Salaried Competent to
s s person enter
valid
Man contract
Quantum of 5000- 20000- 20000-1000000 1000000 25000-
finance 15 2000 1000000
00 00
00
0
Margin _ 15% _ _ 10%

Co- Having Employed Business Employed Capacity &

obligati an /employed conditio
on y n
sal
ari
ed
per
son
Security Gold Gold Gold jewellary Gold Jewellary/gol
je jewe jewellar d coins
wel llary y
lar
y
Repayment 12 1 year 1_2 year 1 year-3 year 12 months
mo
nt
hs,
2
yea
r
Disbursemen DD Demand Demand draft DD Demand draft
t draf
t

Nature of Term Term loan Term loan Term loan Term loan
loan loa
n
Part release Allowed Permitted Not permitted Not permitted Not permitted

Interest free 55 60 55 55 60
day
limit
Period of 1_3years 1-2 years 1_3 years 1_2 years 2 years

31
 loan
Rate of 3%p/m 2.75p/m 2.50p/m 3p/m 11.50p.a
interest
Penal 2% 2% 2% 2% 2%

Processing Depends 2% 1_1.75% 1-2% 0.50-1%

charges on
am
ou
nt

ANALYSIS AND INTREPETATION

Gold prices are close to an all time high. Is this a good time to unlock the value of your holdings
in Gold and take a Loan against Gold. If you are in need of Gold, you might be able to borrow
against it. Here we explain to you the basics of Gold Loans. Many people have assets such as
Gold ornaments and jewellary that earn no income because they lie idle at home or in a locker. If
you are in need of a loan, and if you are confident of your ability to repay the loan on time, you
can unlock the value of these assets by taking a Loan against Gold.

THE VARIOUS DIFFERENCES ARE AS

Purpose: the basic purpose of all the banks is to provide this only against jewellary but I
provided it for all purposes to maintain high liquidity.

Eligibility: the basic eligibility by all of these banks is generally for service person, businessman
or employed persons but I provided to all who are competent to act to achieve more customer
value and loyalty to generate more revenue.

Quantum of finance : As Citi bank is providing very high amount of about 15 lacs but I want to
play safe due to which I offer from 25000-10 lacs, so that there will not be possibility of high
NPA’S and defaulters which can have bad effect on company.

Margin : As only Andhra bank focuses on margin which leads to deregulation of customers as
they feel it as burden.

Security: As security is necessary for reducing possibility of default so all banks takes gold
jewellary/coins as primary security to maintain high liquidity .

32
Disbursement: As all banks believes demand draft as a safe mode of payment without any
charge and loss.

Nature of loan: As the gold loans are for short period so all of them are included in term loans.

Period of loan: As most of the banks has set up the time period from 1 year to 3 years, so as to
get profit maximization with in short term for high level development.

Rate of interest: As the interest varies by small amount because of the fact to attract more
customers for revenue generation but I offer annually instead of per month so that customers
may not feel burden on them.

Processing charges: As I had kept very low processing charge to offer more benefit to
customers.

More over we are providing interest free credit up to 60 days so that customer tries to repay loan
within this time and wants to achieve benefit of profit without paying any interest. They can also
acquire very high benefit by using this interest free credit in good and revenue generating
policies.

Gold Credit Card Benefits

My Gold Credit Card: It’s overloaded with travel benefits – discounts, cashback offers, air miles
redemption. Get a Bank Gold Card and get introduced to a whole new world of privileges.

Attractive Reward Points*

Earn 1 reward point per Rs 150 spent on the Gold Credit Card.

Rewards point’s redemption – After earning all those reward points on your OUR Bank Gold
Credit Card, redeem them for exciting gifts and services! You could even convert them to airline
miles with India’s leading airlines through the My Rewards programme.

Worldwide acceptance – Accepted at over 23 million Merchant Establishments around the

world, including 110,000 Merchant Establishments in India.

Revolving credit facility – Pay a minimum amount, which is 5% (subject to a minimum amount
of Rs.200) of your total bill amount or any higher amount whichever is convenient and carry
forward the balance to a better financial month. For this facility you pay a nominal charge of just
3.25% per month (39.0% annually).

Free Add-on card – You can share these wonderful features with your loved ones too – we offer
the facility of an add-on card for your spouse, children or parents. Allow us to offer add-on cards
to you FREE OF COST with our compliments.

Interest free credit facility - Avail of up to 50 days of interest free period from the date of
purchase (subject to the submission of the charge by the Merchant).

33
CONCLUSION
Many people have assets such as Gold ornaments and jewellary that earn no income because
they lie idle at home or in a locker. If you are in need of a loan, and if you are confident of your
ability to repay the loan on time, you can unlock the value of these assets by taking a Loan
against Gold.

You offer the lender your Gold. The lender gives you a loan against your ornaments after a quick
evaluation of its purity. The lender will usually not give you the loan up to the full value of the
loan, but generally you can get up to 80% of the value. You pay interest on the loan. At the end
of the loan, you repay the loan and can take your Gold back from the lender.

There is always a situation when money needs to be arranged for at short notice. It could be a
medical emergency or time to pay off an urgent debt.Whatever the need may be, is it possible to
get a loan instantly, without having to submit reams of documents and waiting for an approval

 Secured Loan: Gold Loans are secured loans - you are borrowing against the security of
your Gold that you give to the lender and in return for which you get the loan.

 Purpose: You can use the loan towards any purpose, as long as it is not for any illegal
activity or for speculation in the stock market. Non-banking companies have even fewer
restrictions on what you can use the loan for.
 Interest Rate and Charges: Banks are currently charging approximately 12.5% interest
for whatever tenure you take the loan for. They usually have a processing fee for the loan
as well. Non-banking companies have 30-60-90 day and other schemes where the rates of
interest can be approximately 2%+ per month. Annually, this works out to be about 27%
per annum, which is a very high rate of interest. Non-banking companies usually don't
have a processing fee for the loan.
 Loan Amount: Lending can start at amounts as low as Rs 25,000, but some banks can
lend you anywhere from Rs 10 lakhs up to Rs 75 lakhs, depending upon the value of your
Gold. The non-banking companies usually deal in much smaller loan amounts because
they often cater to a different kind of customer base. None of these two types of lenders
charges an evaluation fee for your Gold.

Repayment Terms: Banks usually have terms that run from 3 to 12 months, but you can prepay at
anytime. At non-banking companies you can choose the term that you want, and
accordingly select the loan that suits you.

34
REFERENCES:

 rbidocs.rbi.org.in/rdocs/Bulletin/PDFs/78680.pdf

 www.rbi.org.in/scripts/NotificationUser.aspx?Id=2615

 www.icrier.org/publication/WORKING_PAPER_215.pdf

 cab.org.in/.../Financial%20Inclusion%20%20The%20Indian%20Experience/Universal
%20Financial%20Inclusion%20in%20India%20-.

 www.idrbt.ac.in/.../IndianBank%20-%20KC%20Chakravathy.pdf

 www.mpf.org.in/pdf/...%20papers/The%20Eko%20Series%20on
%20Financial%20Inclusion%20White

 www.apmas.org/pdf%5CFinancial%20Inclusion%20Scoping%20Paper
%2020Mar08...

 http://planningcommission.nic.in/reports/genrep/rep_fr/cfsr_all.pdf

 www.nabard.org/.../Financial%20lnclusion%20and%20SHGs.pdf

 dspace.iimk.ac.in/bit stream/2259/485/1/271-286+.pdf

 www.iimb.ernet.in/microfinance/ramnagar/index.../fin_inlcusion.pdf

 www.iba.org.in/events/ITEnabledFinInclCover.pdf

 cysd.org/Rural Livelihood/.../Financial%20Inclusion%20-%20draft.pdf

 www.rbi.org

35
BIBILOGRAPHY

 FINANCIAL INSTITUTIONS & SERVICES BY MITTAL

 VAISHLEY AND MITTAL(2010) INSURANCE SECTOR
 BANKING & INSURANCE BY A.M. RASTHOGI
 INDIAN ECONOMY 2010 BY GEETIKA GHOSH GUPTA
 RBI AND FINANCIAL INSTITUTIONS BY SANDEEP VOHRA
 PERSONAL FINANCE2010 BY J.ROBBINSON

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