According to NDTV Profit report, Gold prices may be hovering around new highs but banks and NBFCs are no longer giving loans to the tune of 100 per cent on the full value of the pledged gold as they fear that gold prices have gone too high for comfort. A customer Shailesh Jain who pledged gold recently said, “I got around Rs. 4,000 less for the same quantity than what I had got last time.” Most lenders have reduced the value of gold as security by around 10-15 per cent. So customers may now have to settle for amount much lesser than they could have, a few months ago. Earlier if you had 10 gms of gold, which was valued at Rs. 20,000, you could get a loan up to 80-90 per cent of its market value. Now, with 10 grams of gold valued at nearly Rs. 26,000, customers can only hope to get 70 per cent of the value. Kumar Jain, VP at Mumbai Jewellers association said, “This is only done because tomorrow if the price goes up or down, people should come to collect the amount which they keep for mortgage.” Jewellers say that they also deduct making charges from customers, when valuing the gold offered as pledge. Since gold prices have risen 20 per cent this year, there is enough gold that customers are willing to pledge for loans. For customers, borrowing money with gold as a pledge could cause a small hole in the pocket. HDFC Bank offers 85 per cent of the value of gold as loan, while Reliance Money offers loan up to 90 per cent of the value. Muthoot Finance, which recently listed on the markets, gives customers 71 per cent of the value of the gold. Gold loan companies like Mannapuram Finance and Muthoot Finance say that most of the gold holding is redeemed within 4-5 months.

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