Bank of India and Punjab & Sind Bank offer the lowest rates on gold loans

The Reserve Bank of India on Friday left key policy rates unchanged and also reiterated its intention to maintain the accommodative stance.

This means that the benign interest rate in the system is likely to continue for now. While lower interest rates are not good news for depositors, particularly senior citizens, for borrowers, it means that lighter interest burden would continue.

Public sector banks offer the best rates

Public sector banks lead from the front when it comes to offering cheaper loans across categories. Mortgaging idle asset like gold is a more prudent way of raising funds in times of crises rather than taking a personal loan.  Punjab & Sind Bank charges 7 percent per annum for gold loans of Rs 5 lakh with a tenure of three years, as per data from Bankbazaar.  Non-banking financial companies (NBFCs), which are active in this space, charge much higher rates of interest, with the cheapest loans ranging from 9.24-12 percent per annum. IIFL Finance (9.24 percent) offers the lowest rate amongst NBFCs, followed by Bajaj Finserv (11 percent), Muthoot Finance (11.9 percent) and Mannapuram Finance (12 percent).