ustomers seeking a loan against gold jewellery will not get the benefit of the recent surge in gold prices. In fact, they may now have to settle for an amount less than they could perhaps have got about a few months earlier.
The reason: Most lenders are now also reducing the value of gold (being given as security) by about 10 per cent on account of price volatility, besides reducing another 15 per cent towards making charges, while arriving at the loan amount they will offer to customers.
This is over and above the usual practice of considering the 90-day average price for evaluating the value of gold jewellery (based on caratage) that companies like Manappuram Finance and Muthoot Finance follow.
Text: Business Standard
Images: AP, Reuters