Can I take loan against sovereign gold bond?

In 2015, the Indian government's Gold Monetization Scheme issued sovereign gold bonds (SGB). From October 2021 to March 2022, gold bonds will be released each month. I have also taken a loan against SGBs. So let me guide you on whether can I take loan against sovereign gold bond.

Can you take a loan against sovereign gold bond scheme?

You can use SGBs as security for loans from banks, financial institutions, and non-banking financial companies (NBFC). The loan-to-value ratio will be similar to that which the RBI regulates for conventional gold loans. The bank or financing organisation would decide whether to provide a loan secured by SGBs.

What is a loan against sovereign gold bond SBI highlights?

• The bank would only authorise loans up to a maximum of Rs. 20 lakh under this lending programme.

• The one-year Marginal Cost of Funds based Lending Rate (MCLR) and a spread factor are added together. It is to determine the interest rate that will be charged on this loan. The actual interest rate for this loan as of now is around 10.45%.

• This loan must be repaid within three years or the remaining time on the sovereign gold bond, whatever comes first.

• When the loan is approved, the bank assesses a fee of 25% of the amount of the sovereign gold bonds.

What documents are required for a loan against SGBs in SBI?

• Two passport-size photos of the applicant and any co-applicant may be required along with the duly completed and signed loan application form.

• Personal ID proof such as passport, driver's licence, aadhaar card, or PAN card.

• Signature verification: Driving license, PAN card, passport or banker's confirmation.

• Residence address verification (Any One): A valid rental agreement, an electricity bill, a post-paid phone bill and an aadhaar card

• Income and banking documentation for salaried individuals such as Form 16 or income tax returns, or the last three months' pay slips.

• Income/banking proof for independent professionals/insurance agents: Income calculation for the previous two years, income statement, loss and profit account, certificate of registration, GST return, income tax challan/form 26AS/TDS certificate, IT assessment, etc.

I hope you understood the loan against sovereign gold bond facility.