Gold Loan Eligibility For NRIs In Urgent Need Of Funds

Find out about gold loan options for NRIs in need of urgent funds. Get information on eligibility requirements and how to access the money you need quickly.

4 Aug,2023 11:42 IST 1433
Gold Loan Eligibility For NRIs In Urgent Need Of Funds

Gold has a special significance in all Indian households. From the far North to the far South, from the far East to the far West, almost every auspicious occasion is celebrated with gifting or exchanging of gold. In addition, gold is considered a relatively stable investment by millions all over the world. Thus, almost every Indian household has some amount of gold as an asset or as family heirlooms with sentimental value.

Gold loans are one of the preferred means of raising funds in times of emergency for many Indians. A gold loan is a loan offered by a bank or a Non-Banking Financial Companies (NBFCs) to an individual who offers gold as a collateral. The gold may be in the form of jewellery. The amount of loan you can obtain by depositing gold as a collateral depends on the following factors:

Prevailing price of gold in the market
Weight of gold deposited
Purity of gold deposited
Loan to value ratio – upto 75% depending on the lender

Not only is a gold jewellery loan a relatively easy means of raising funds for ordinary Indian citizens, it is also a relatively easy means of raising funds for Non-Resident Indians. This is because of the simple application and documentation process and the eligibility criteria.

Suggested Reading: Why Gold Loans are Best during Cash Crises

Eligibility Criteria:

For an NRI to secure a gold loan from a bank or non-banking financial institution the following criteria will apply:

Age between 18 to 60 years
Holder of a valid passport

In addition, an NRI MUST apply along with a co-applicant in order to secure a gold loan.

Why Gold Loans Are A Preferred Option For NRIs:

There are several banks and NBFCs that offer NRI gold loans. The gold loan process is far simpler than the process of obtaining any other kind of loan in the case of NRIs. The number of documents that an NRI needs to submit is also much less compared to other kinds of loans. Most lenders only require the NRIs passport which serves as a proof of address and proof of identity.

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There are several reasons why gold loans are a preferred means of raising finance for NRIs. As many NRIs spend very little time in the country, the chances are that they will not have any relationship with lenders and credit card institutions. Thus, there will be no credit rating record available with credit rating bureaus such as CIBIL and Equifax which are licensed to operate in India. Fortunately, as a gold loan is a secured loan, lenders do not require a borrower to have a good CIBIL score in order to secure a gold loan. In fact, one can secure a gold loan for NRIs without any CIBIL score record. However, not having a CIBIL score or a CIBIL score above 750 also usually means that you will be charged a slightly higher rate of interest than an applicant with a good credit rating record. However, being a secured loan, lenders usually charge a lower interest rate on gold loans in comparison to other unsecured loans.

Another reason why NRI gold loans are seen as a preferred means of raising funds for NRIs is the ease of application. Many lenders now offer gold loans online. One can apply for a gold loan with a few clicks of a mouse or a few taps on your phone screen. You can also use a Gold Loan EMI Calculator to get an idea of the amount of gold you need to deposit in order to get the loan you need. You need not travel to a bank with your gold to understand the gold loan details or the gold loan documents that are needed in order to avail the loan. Log on to the IIFL website to find details of documentation and procedures for applying for a gold loan. Once you have completed your research, all you need to do is fill in the details and click on the “Apply” button on the IIFL gold loan website page. Since most NRIs spend only a few weeks a year in India, time is of great essence. The convenience of applying online for a gold loan makes it a preferred option while applying for a loan. Once you submit your application, most lenders will send a representative to your doorstep for valuation and collection of the gold to be deposited as collateral. After the valuation is complete and the gold loan agreement signed, the loan will be transferred to the designated account in a matter of minutes.

Suggested Reading: How to Avail Gold Loan Without a Jewellery Bill?

One of the most appealing features of gold loans offered is the loan amount offered. IIFL Finance, for instance, offers loan amounts equivalent to the valuation of the gold deposited. This could be INR 5 crores, or INR 10 crores, or more.

Another reason why gold loans work for NRIs is the flexible repayment options offered by most lenders. A borrower can choose to pay in regular monthly or quarterly EMIs. He or she may also choose the option of only paying the interest component at regular intervals and repaying the principal in bulk at the end of the term. Alternatively, some lenders allow borrowers to repay the entire principal and interest in one go at the end of the loan term.

To conclude, an NRI in urgent need of funds will find gold loans offered by banks and Non-Banking Financial Institutions a convenient way of raising quick funds during a crisis. One only needs to ensure that you meet the eligibility criteria and have a reliable co-applicant. Most important is planning your gold loan wisely to avoid losing some or all of the gold deposited due to non-payment of the agreed amount to the lender as per the repayment schedule.

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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