|Gold has always been considered as one of the prime assets in our country because of its monetary value, its association with Goddess of Wealth Lakshmi, and also because of the emotional value one associates. The importance of gold can be valued from the fact that it is one of the heritages alongside land which is passed over from one generation to another.
With increasing disposable income, and more liberal outlook towards lifestyle, gold based financing has picked up pace in the last decade. People are now willing to keep their gold as collateral with lenders, which was once considered a taboo. Although major banks like HDFC Bank, ICICI Bank offer loans against gold as collateral, but it is the lenders like Manappuram and Muthoot have specialized in the field and gained popularity with those seeking funds.
Gold Loans or Loan against Gold
The gold loans can be differentiated from personal loans in the way that the gold loans are backed by a security and consume lesser paper work, against personal loans which do not have any collateral and require more paperwork to. Gold loans also offer a higher loan to value (LTV) compared to personal loans, which means lesser margin from the borrower's end.