Ease of getting a loan against gold jewellery, the price of which had sniffed at Rs 8,000/gram late October is another factor driving this segment. Also, being a fully secured loan product, unlike unsecured personal loans, banks charge only under-10% interest, while gold loan NBFCs charge much higher, 1.2% a month for three months. If not unpledged in the third month, the interest rate spikes to 2%. In the former scenario, a borrower pays 1.4% on an annualised basis and 24% in the case of the second event.
According to the latest Reserve Bank data on sectoral deployment of credit, banks’ loans against gold jewellery have grown by a whopping 50.4% in the first seven months of this fiscal to Rs 1,54,282 crore as of October 18, 2024, up a full 56% on-year and from Rs 1,02,562 crore end-March 2024. In the same period in October 2023, the growth was only 13%.
