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

Gold is back in the news again. The prices have remained weak over the last six months, but it might see an upsurge due to the morbid COVID-induced health crisis in the country.

As Moneycontrol has pointed out earlier, the asset class tends to shine during such crises. The value of this asset class as a bulwark against crisis apart, it can also come to your rescue in financial or medical emergencies. Banks and non-banking financial companies (NBFCs) offer quick loans against gold at interest rates far lower than those of personal loans. At present, loans against gold start at an interest rate of as low as 7 percent, as per Bankbazaar data, which is comparable to home loan rates.

Punjab & Sind Bank offers this lowest rate, followed by another public sector bank, Bank of India, at 7.35 percent for a Rs 5-lakh loan with a three-year tenure. NBFCs are highly active in this space, though interest rates are comparatively on the higher side. IIFL charges the cheapest interest rate (9.24 percent) amongst NBFCs.

A note on the table

Interest rate on gold loan for all listed (BSE) public and private banks and selected NBFCs have been considered for data compilation. Banks for which data is not available on their websites have not been considered.  Banks are listed in ascending order on the basis of interest rate i.e. bank/NBFC offering lowest interest rate on gold loan (for various loan amounts) is placed at top and highest at the bottom. Lowest rate offered by the banks/NBFC is considered in the table. EMI is calculated on the basis of interest rate mentioned in the table for a Rs 5-lakh loan with tenure of three years (processing and other charges are assumed to be zero for EMI calculation).