Gold loans: Bank of India and State Bank of India among those offering the lowest rates
Punjab & Sind Bank offers the lowest interest rate, at 7 percent
June 10, 2021 / 11:13 AM IST
Gold loan-focused non-banking financial companies such as Muthoot and Manappuram Finance may have seen growth of 20-24 percent in the pandemic year, but public sector banks continue to offer the most attractive deals.
Punjab & Sind Bank offers the lowest interest rate (7 percent) on gold loans of Rs 5 lakh with a three-year tenure, as per data from Bankbazaar.com. It is followed by Bank of India (7.35 percent) and State Bank of India (7.5 percent). NBFCs don’t figure in the list of top ten banks by lowest interest rates (see table). Amongst NBFCs, IIFL Finance offers the cheapest gold loans starting at 9.24 percent, followed by Muthoot (11.9 percent), Manappuram (12 percent) and Bajaj Finance (12 percent).
The segment has received traction during the crisis primarily due to ease of mortgaging gold assets at simple-to-understand terms and conditions. The economic scenario in country has been under the constant shadow of job losses, pay cuts and uncertainties since COVID-19 hit Indian shores a year ago. Many decided to leverage their idle gold holdings to create liquidity for meeting regular as well as emergency needs.
A note on the table
Interest rates on gold loans for all listed (BSE) public, 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. Data collected from respective banks’ websites as on May 27, 2021. Banks are listed in ascending order on the basis of interest rate – that is, 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 Rs 5-lakh loan with a tenure of three years (processing and other charges are assumed to be zero for EMI calculation).