The gold loan is a secured loan where the borrower keeps their gold, ranging from 19K to 24K with a bank or a financial institution as security and avails capital against In comparative terms a gold loan can be understood as a similar concept to contract. loan in which the owner keeps their house or property with the bank and takes a loan against it to fulfil their need for funds.

Gold Loans Working.

The gold loan is among banks profit-making loans as banks are free from the worry of evasion of assets. This is because the jewellery is taken as security and remains with the bank even if the borrower defaults on the payment of their monthly instalments on their fund.  Different ways for gold loan working:
  • Checking the quality: When a customer speaks to a financial institution for a gold loan, the 1st step the bank takes is to check the purity of the gold that is being considered as security along with determination of the value of the jewellery.
  • Approval of gold loan: Once the condition and value of gold is determined and the KYC policy is complete, the loan terms are accepted by both the financial bank and the consumer. In agreement, the loan is approved and the loan amount is then transferred to the customer account. The complete process can be done within one day.
  • Know Your Customer: KYC stands the rules and checks by the Reserve Bank of India (RBI) that are performed by the bank, where the bank knows abouts customer’s details such as identity, property papers, credit history and the necessity for applying for a loan and other details deciding in granting the loan.