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Gold loan with automatic sweep facility

You can withdraw the gold loan amount using your debit card

What is it?

It is a loan against gold but with a difference. The loan amount acts like an overdraft product with an automatic sweep facility linked to your savings account with Federal Bank Ltd. If you do not have a savings account with the bank, you will have to open one for this scheme.

What’s special?

You can withdraw the gold loan amount using your debit card from an automated teller machine (ATM) of any bank at any branch. However, to be able to withdraw from an ATM, it has to be linked to your savings account. Only if your savings account balance comes down to zero, will you be able to withdraw or use the loan amount using an ATM card. You can even swipe your card and use the loan amount to make purchases.

You can also withdraw the loan amount using a cheque which will be issued separately for the overdraft account.

You can even use the ornaments if the entire loan amount allowed for all your ornaments hasn’t been withdrawn or used. But when you do this, your loan limit will come down. After using the jewellery, you can again pledge it.

Main features

Loan amount: You can get a loan on 75% of the market value of the gold you deposit. The maximum loan amount that you can get under this scheme is 75 lakh; there is no minimum limit.

What can you pledge? You can pledge gold ornaments and coins, but you can’t pledge gold bars. Only 22K gold is accepted under this scheme. If you pledge stone-studded ornaments, the weight of stones will be reduced and only the net weight of the gold would be considered.

Tenor: You have three years to repay the loan amount.

What are the charges?

You have to pay a processing fee of 0.25% of the limit sanctioned per annum or 500 per annum, whichever is higher. There is a transaction fee of 50 for every service. For example, if you want to replace a gold chain with a gold bangle of the same weight, you will have to pay 50 for this service. You need to pay an interest on daily basis on the amount that you withdraw.

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The processing fees varies from bank to bank. The loan on total value of gold is highest in HDFC Bank Ltd with 100%. So compare charges and features before going for it.

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