Are there any people who haven’t taken a loan after pledging gold? People taking loan renew or take back their gold before the term ends. However, that trend is going to end? Many financial institutions are considering to introduce monthly repayment system. Financial institutions have expressed great concern over the sharp increase in gold loan issuance and some financial institutions failing to comply with regulations. It is in this context that the decision to introduce the EMI facility was made.

If only the EMI system is allowed, gold loans will completely switch to the term loan system. The principal and interest must be repaid in monthly installments like other loans. Although this system is in place now, no one follows it. Many people renew or take back their pledged gold at the last minute.

Meantime, the Reserve Bank had pointed out that many financial institutions are failing to comply with the norms to be followed in gold loans. The KYC rules, cash limits, LTV (loan to value ratio) requirements, and purity checks are among the non-compliances. In a gold loan, a maximum of Rs 20,000 can be given to the customer in cash. If the amount is more than that, it should be transferred digitally. A maximum of 75 percent of the total value of the gold collateral can be given as a loan.