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    Personal Loan for Jewellery

    Indians love their jewellery. Be it any special occasion like wedding or anniversary the preferred gift is always a piece of jewellery. Gold buying is considered auspicious in India; we even have a festival ‘Dhanteras’ celebrating the buying of gold jewellery. According to some reports, Indians bought 703 tons of gold jewellery in the year 2015. The Indian public owns 20,000 tons of gold in jewellery, gold bars and coins.

    With this entire craze for gold, it’s no wonder that people try to avail loans to buy jewellery. And it seems obvious that banks and other financial institutions must be tapping this market by extending loans to buy jewellery. But in actuality, while availing loan against gold is prevalent, currently not a single bank provides loans for the express purpose of buying gold.

    RBI bans loans for buying gold

    Back in October 30, 2012, the Reserve Bank of India put a blanket ban on banks against providing loans to their customers for the purpose of buying gold in any form, be it gold jewellery, gold bullion, gold coins, units of gold mutual funds or gold Exchange Traded Funds.

    The central bank took this decision due to a marked increase in the import of gold in India. Despite a hike of 10% in gold price, the demand for gold went up by 27% in the quarter July-September, 2012. The greater influx of gold posed a threat to the country’s balance of trade. The central bank was concerned that jewellery and gold loans from banks were fuelling the demand for gold further.

    Loans available before the ban

    The practice of availing loans to buy gold jewellery can be traced back as far as 2003. Even then very few banks jumped into the bandwagon of jewellery loan schemes. The practice was more prevalent in the southern banks, where it’s traditional to buy lots of gold jewellery, especially during weddings.

    Corporation Bank and Bank of India are a couple of nationalised banks that offered loans for buying jewellery back then. An example can be the BOI’s BOI Star Mahila Gold Loan Scheme. The purpose of this scheme was stated by the bank as purchase of hallmarked Gold ornaments, preferably from reputed Jewellers, and/or Gold coins from the Bank of India. Following are the details of that scheme:

    Target Group Resident Indian Women
    • Working Women: Women permanently employed either salaried or self-employed professional.
    • Non-Working Women: Spouse/other close relation could apply co-borrower.
    Age Between 18 to 60 years
    Type of Advance Demand/ Term Loan
    Quantum of Advance
    • Working / Non-working women: 10 times of monthly net income (take home salary of self/spouse).
    • Professional: 50% of Gross Annual Income as per latest Income Tax Return. Minimum Rs.50,000. Maximum Rs.2 lakh.
    Margin 20% of the cost of Jewellery/Gold.
    Interest Rate 3.00% over Base Rate
    Repayment Maximum 60 EMIs
    Security Liquid securities for loan amount over Rs.50,000
    Processing Charge One-time fee of 2% of the loan amount [Min. Rs.500, Max. Rs.2,000]

    Current Loan Schemes to buy Jewellery

    Presently, no bank offers loans to buy jewellery. That doesn’t mean you cannot take loans to do so if you need. Most banks offer personal loans to an extent, without asking too many questions as to the purpose of the loan. But banks take a huge risk when the reason for availing a loan isn’t mentioned.

    So, a better and easier option is a wedding loan. Jewellery buying in bulk happens mostly during weddings, and part of the loan amount availed for weddings often go toward buying jewellery. All major banks and financial institutions like HDFC Bank, Axis Bank, Tata Capital, Capital First, ICICI Bank, Citibank, State Bank of India, IDBI Bank, Kotak Mahindra, Punjab National Bank, Bank of Baroda, and etc. offer customised wedding loans for your big day celebrations.

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