Loan against Gold Ornament
Loan against Gold Ornaments
Banks give loan against gold ornaments for agricultural as well s for non agricultural purposes .The nature of charge created while giving this type of loan is a pledge. Some banks allow a overdraft also against the security of gold ornaments .
a) The amount of loan on onwards depends upon the market value and purity of the gold.Normally , bank keeps a margin of around thirty per cent on the market value of the ornament.
b) The rate of interest varies with the purpose of the loan .A loan cannot be given against the security of pure gold.
C) The repayment period depends upon the purpose of the loan .If the loan is for agriculture purpose, the repayment period normally coincides with the hrvest and maketting of the produce.
d)On closure of the loan , the ornaments should be returned to the pledgor or his authorized representatives.
e) Even after the closure of this loan , the banker can retain the possession of the ornament , if any other overdue loan is there in the name of the borrower , by exercising the right of general lien .
f) In Â case of a default in repayment Â of the loan , the bank as pledge has a right to sell the ornaments pledged , in an action or by private sale , only after giving to the pledgeor a reasonable notice of intended sale as per section 176 of theÂ Indian contract Act : other wise the bank has to compensate the borrower for the loss suffered .The expenses incurred by the bank in connection withÂ notice of sale , including paper publicationÂ if any , shall be recovered from the party.
g) Normally , banks appoint appraisers for the purpose of appraising the purity of the gold ornaments .
h0 The loan granted under this category is subject to NPA norms
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