Personal Finance Term Paper

8/9/2019 Personal Finance Term Paper

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DEPARTMENT OF MANAGEMENT

TERM PAPER REPORT

TITLE

Gold loan products of different banks

Submitted By:

ROHIT SHARMA

Roll No:

RR-1810A17

Registration No:

10810923(G2)

Submitted To:MS NEHA SHANDILYA

DEPARTMENT OF MANAGEMENT

LOVELY PROFESSIONAL UNIVERSITY

PHAGWARA (2010)

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A c k n o w l e d g e m e n t

I sincerely feel that the credit of this term paper

could not be narrowed to only one individual as the

whole work is outcome of integrated efforts of all

those concerned with it through whose cooperation

and effective guidance I could achieve its

completion.

I wish to place my profound indebtness and deep

sense of obligation to MS NEHA SHANDILYA

Senior lecturer Lovely Professional University for

providing me with the opportunity to work on suchan interesting topic. I also want to pay my

gratitude and sincere thanks to my esteemed mam

for being supportive and lenient during the entire

tenure of this term paper.

When emotions are involved words fail to mean.

My heart full sincere gratitude to my parents, who

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have supported, encouraged and helped me

throughout my life and academic career.

ROHIT SHARMA

Loan

A loan is a type ofdebt. Like all debt instruments, a loan entails the redistribution of financialassets over time, between the lenderand theborrower.

In a loan, the borrower initially receives or borrows an amount ofmoney, called the principal,from the lender, and is obligated to pay back or repay an equal amount of money to the lender at

a later time. Typically, the money is paid back in regular installments, or partial repayments; inan annuity, each installment is the same amount. The loan is generally provided at a cost,referred to as interest on the debt, which provides an incentive for the lender to engage in theloan. In a legal loan, each of these obligations and restrictions is enforced by contract, which canalso place the borrower under additional restrictions known as loan covenants. Although thisarticle focuses on monetary loans, in practice any material object might be lent.

Acting as a provider of loans is one of the principal tasks for financial institutions. For otherinstitutions, issuing ofdebt contracts such asbonds is a typical source of funding.

Types of loans

Secured

A secured loan is a loan in which the borrowerpledges some asset (e.g. a car or property) ascollateral for the loan.

A mortgage loan is a very common type of debt instrument, used by many individuals topurchase housing. In this arrangement, the money is used to purchase the property. The financial

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institution, however, is given security a lien on the title to the house until the mortgage ispaid off in full. If the borrowerdefaults on the loan, the bank would have the legal right torepossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in

much the same way as a mortgage is secured by housing. The duration of the loan period isconsiderably shorter often corresponding to the useful life of the car. There are two types ofauto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to aconsumer. An indirect auto loan is where a car dealership acts as an intermediary between thebank or financial institution and the consumer.

A type of loan especially used in limited partnership agreements is the recourse note.

A stock hedge loan is a special type of securities lending whereby the stock of a borrower ishedged by the lender against loss, using options or otherhedging strategies to reduce lender risk

A pre-settlement loan is a non-recourse debt, this is when a monetary loan is given based on themerit and awardable amount in a lawsuit case. Only certain types of lawsuit cases are eligible fora pre-settlement loan This is considered a secured non-recourse debt due to the fact that if thecase reaches a verdict in favor of the defendant the loan is forgiven.

Unsecured

Unsecured loans are monetary loans that are not secured against the borrower's assets. Thesemay be available from financial institutions under many different guises or marketing packages:

credit card debt

personal loans bankoverdrafts credit facilities or lines of credit corporate bonds

The interest rates applicable to these different forms may vary depending on the lender and theborrower. These may or may not be regulated by law. In the United Kingdom, when applied toindividuals, these may come under the Consumer Credit Act 1974.

Demand

Demand loans are short term loans that are atypical in that they do not have fixed dates forrepayment and carry a floating interest rate which varies according to the prime rate. They can be"called" for repayment by the lending institution at any time. Demand loans may be unsecured orsecured.

Loan payment

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The most typical loan payment type is the fully amortizing payment in which each monthly ratehas the same value overtime.

The fixed monthly payment P for a loan ofL forn months and a monthly interest rate c is:

Abuses in lending

Predatory lending is one form of abuse in the granting of loans. It usually involves granting aloan in order to put the borrower in a position that one can gain advantage over him or her.Where the moneylender is not authorized, they could be considered a loan shark.

Usury is a different form of abuse, where the lender charges excessive interest. In different timeperiods and cultures the acceptable interest rate has varied, from no interest at all to unlimited

interest rates. Credit card companies in some countries have been accused by consumerorganisations of lending at usurious interest rates and making money out of frivolous "extracharges".

Abuses can also take place in the form of the customer abusing the lender by not repaying theloan or with intent to defraud the lender.

Income from discharge of indebtedness

Although a loan does not start out as income to the borrower, it becomes income to the borrowerif the borrower is discharged of indebtedness.Thus, if a debt is discharged, then the borrower

essentially has received income equal to the amount of the indebtedness. The Internal RevenueCode lists Income from Discharge of Indebtedness in Section 62(a)(12) as a source ofgrossincome.

Gold Loans

Gold prices are close to an all time high. Is this a good time to unlock the value of your holdingsin Gold and take a Loan Against Gold. If you are in need of Gold, you might be able to borrowagainst it. Here we explain to you the basics of Gold Loans. Many people have assets such asGold ornaments and jewellery that earn no income because they lie idle at home or in a locker. If

you are in need of a loan, and if you are confident of your ability to repay the loan on time, youcan unlock the value of these assets by taking a Loan against Gold.

You offer the lender your Gold. The lender gives you a loan against your ornaments after a quickevaluation of its purity. The lender will usually not give you the loan up to the full value of theloan, but generally you can get up to 80% of the value. You pay interest on the loan. At the endof the loan, you repay the loan and can take your Gold back from the lender.

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Criteria for getting Gold Loan

You can get a Gold Loan through either your bank or through a non-banking company thatspecializes in Loans Against Gold.

If you go to a bank like HDFC or ICICI, you will be asked to produce back-up documentationrelated to your ID and other personal details. The process, as advertised, can take up to 1 hour.You might need to prove that the Gold is owned by you.

If you go to a non-banking company such as Muthoot or Mannupuram, the process can be asquick as a few minutes according to what these companies advertise. The documentationrequired is usually less than what banks will demand. Because the process is less rigorous,especially because these lenders do not review if you have creditworthiness, they charge a higherrate of interest than the banks.

Risk that Gold prices will move up or down

As you have probably seen in the media, Gold prices are at an all time high (in nominal terms),and are expected to go higher. However, you face no risk if there is a price movement during thetime your loan is outstanding. As long as you pay your loan back on time, you will get your Goldornaments back, exactly in the same state and weight that you gave at the time you took a loan.

Typically, your Gold is safe with the lender. Most of these lenders come under strict regulatorysupervision from the RBI. Go with a lender that has been around for a while, not just any upstartlender.

THINGS NEEDED FOR GETTING GOLD LOAN

Money lenders are always looking for the best clients to lend their money to. But what sorts ofthings do they look for in a company? This is where the 5 C's of Credit comes in - character,capacity, capital, conditions, and collateral.

Character

The character is the client's reputation and reliability. Are you trustworthy enough to repay theloan? Things associated with your character include your business experience and knowledge,references and education, and personal and/or business credit history.

Capacity

Is your company able to repay the amount borrowed? Your company's cash flow will bereviewed, and how you intend to repay the loan is established. Payment history and records onother credit relations will be looked at and considered. These include both personal andcommercial.

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Capital

How much money have you invested into your business? The amount of your own money putinto the company portrays a message of confidence and trust. It shows that you have taken therisk of funding the company, so the lender knows it is safe to do the same.

ConditionsHow well is your business currently faring? What will the loan be used for? Is it for equipment,expansion, or just for financial security? Things such as the economy, competition, and customerbase are noted.

Collateral

If for some reason you cannot provide repayment, collateral will be a secondary source ofrepayment. Collateral can include things such as inventory, equipment, real estate, stocks,accounts receivable, etc. Usually a signed contract is needed as a guarantee.

When you go to a bank or financial lending institution there are 5 key things they will take into

consideration before approving a loan. These "5 Cs" apply to both personal and business loans.Since the bank or lending institution are in business to make money, they take these 5 things veryseriously and you will want to be prepared before applying for a business loan. The 5 C's in noparticular order are capital, collateral, conditions, character, and capacity. Here we will dealspecifically how they apply to a business loan.

Capital is the money you personally have invested or will invest in the business. When applyingfor a business loan the prospective lender wants to see what kind of risk are you willing to maketo see this business succeed The more you personally have invested in the business the morelikely you are to work your hardest to make sure the business is a success. If you are not willing

or prepared to make a sizable financial investment in the company, more than likely the lenderwill not be willing to take a risk either. If your business is already operating you will be asked toprovide personal and business records showing every detail of the business including tax records,accounts payable, and accounts receivable.

Collateral is personal and or business assets that you are willing to put up as security in theevent the business cannot repay its loan. The bank wants to know there is a second source ofrepayment. Equipment, buildings, accounts receivable, and in some cases, inventory isconsidered possible sources of repayment of the business loan, anything the bank can sell forcash. Both business and personal assets can be sources of collateral for a business loan.Collateral should not be confused with a guarantee. A guarantee is when someone else signs aguarantee document promising to repay the loan if you can't. Some lenders may require bothcollateral and a guarantee as security for a business loan.

Conditions refer to the purpose of the business loan. Will the money be used for workingcapital, additional equipment, or inventory? Other conditions the lender will consider are the

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economy and conditions not only within your business but also in businesses that could affectyour business (your suppliers and or service companies included).

Character is the impression you make on the potential lender. The lender determines whether or

not you can be trusted to repay the business loan if granted. Some of the things the lender mightask for are your educational background, your experience in business and in your industry. Morethan likely they will request references for you and the background and experience of youremployees may also be considered.

Capacity to repay the business loan is the most important of the five factors. The prospectivelender will want to know exactly how you intend to repay the loan. The lender will consider thecash flow from the business, the timing of the repayment, and the probability of successfulrepayment of the loan. Payment history on other credit relationships, personal and business, isconsidered an indicator of future payment performance. A business must be able to pay all its

debts, not just its loan payments, as they come due. Applicants are generally required to providea report on when their income will become cash and when their expenses must be paid. Thisreport is usually in the form of a cash flow projection, broken down on a monthly basis, andcovering the first annual period after the loan is received.Before applying for a business loankeep the 5 Cs in mind and be prepared. Taking time to organize, have your plans in writing, anda positive attitude will take you great steps towards receiving the financial backing you areseeking for your business

Must know facts before taking a GOLD LOAN..

Current gold prices are sky rocketing and so is the time to pledge gold (jewelry) to get short term

loans to fulfill your needs. So, we at deal4loans are bringing to your notice all there is to know

before you undertake such a loan.

Players: There are a host of financial service companies (including banks like HDFC Bank,

ICICI Bank, State Bank of India and its associates, Allahabad Bank, Development Credit Bank,

etc.) which offer Loans against Gold at different interest rates. Non-banking financial

companies or NBFCs (like Manipuri Finance and Muthoot Group), cannot take deposits of

money from the public but can give loans. Various co-operative banks also offer these loans.

Select branches of banks offer loans against gold jewelry. Small branches, which do not have

huge storage space, wouldnt be offering loan against gold. So please confirm.

Rate of Interest: The interest rate ranges anywhere from 12.5% to 33.6%. The rate of interest

charges on loan against gold is lower than that of personal loans. For instance, a PSB charges

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18% interest on personal loan but 15.75% on gold loans while other charges 14.5-16.5% (on

personal loans) and 12.5% (for loans against gold jewelry). But, Loans from NBFCs are costlier

than any bank. Some NBFCs extend loans at a fixed rate of 33.6%. The huge difference in the

rates charged is remarkable!

Interest rate varies due to the quality of gold jewelry. Hallmarked jewelry, (with BIS stamp)

certifies its purity. Interest charged will be lower on non-hallmarked jewelry. The difference

could also be on the basis of carats of gold, whether 22 or 18, etc.

Quality/Purity: Pure gold is available only in the form of gold coins and bars, as jewelry can not

be made of pure gold. Gold coins and bars cant be pledged for loans as people have attachment

to their jewelry and not coins and bars. If value of gold falls below the loans amount a person

would not return for bars and coins but jewelry because of his/her attachment (as jewelry could

be grandmothers or mothers).

The loan amount would be lower than the worth of the jewelry even if it is hallmarked or of

utmost quality.

Gold Prices & its Calculation/Computation: The current gold price is close to Rs.17000 for 10

grams but this is not considered by all banks or even NBFCs. Each bank has different methods of

calculating the value of jewelry pledged. Some banks fix the consideration price at a level (say

Rs 1,005-1,215 per gram) for about 6-12 months and revise it only a year later, no matter what

the actual market price of gold in the international markets is while others take an average of two

weeks market price and value the jewelry to that extent. Some even look at the days

international trading price and offer a loan considering the value of gold on that price. This is

because of the fluctuation of the gold prices. They have to keep margins due to purity issues as it

is very easy to cheat on purity in current scenario.

Loan Amount: The method of calculation of the price of gold can make vast difference to the

loan amount eligibility. It could be 5-10% of the loan amount! The tenure of the loan and the

frequency of repayment are the other factors affecting the amount of loan.

To conclude..

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Enquire, compare and take your time before taking a loan. How much is offered by banks or

NBFC per gram and whether it is after deduction of processing fees etc.? Find out IF the loan

amount will fulfill your need. Select branches of banks which offer loans against gold jewelry.

Then GO FOR IT

Gold loans: Best for urgent money needs

There is always a situation when money needs to be arranged for at short notice. It could be a

medical emergency or time to pay off an urgent debt.Whatever the need may be, is it possible to

get a loan instantly, without having to submit reams of documents and waiting for an approval?

MORTGAGE

You can mortgage gold with any bank, with the minimum of paperwork and walk out with the

money almost immediately. Some banks claim to process gold loans in three minutes, while most

banks hand you the money within an hour!

With the prices of gold rising, banks consider it a safe deal to offer gold loans. You can get up to

60% of the value of your gold. No documents are required, making it a quicker process. At most,

some banks might require a no-objection certificate from the lady of the house, as in Indiagoldjewellary is traditionally considered 'stree-dhan'.

Gold loans typically are for the duration of one year, and can be foreclosed at any time. Banks

charge an interest of 10% to 12% on gold loans, and your liability is to pay the interest on a

monthly or quarterly basis -- no EMIs to pay or worry about.

The jewellery is released by the bank when the total amount due to the bank is realised. In case

you have not been paying the interest on time, an additional penal interest of 2% may be charged

by the bank.

One of the most convenient features of a gold loan, apart from it being immediate, is that you

need not have a source of income to avail a loan.

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Hence, home-makers with no source of income, or people who may normally not be eligible for

loans can mortgage their jewellery to raise funds.

Salient features:

No documents required.

No source of income necessary.

Hassle-free, immediate disbursal.

No EMIs to worry about.

Amount of loan can be as high as Rs 10,00,000, depending on the bank.

The process:

You can walk into your bank and declare to the manager or the loan department that you wish to

avail a gold loan. You will be required to fill up a simple form, and the bank will evaluate your

jewellery.

The bank will either have a jeweller visit the branch for the same, or you may be required to

accompany a bank official to the jeweller for the purpose of evaluation.

The charge for evaluation is generally borne by you, and ranges from Rs 100 to Rs 250.

Once the jewellery has been evaluated, you need to provide a stamp paper to the bank for the

purpose of mortgage. Stamp charges vary according to the amount of the loan.

That's it! The amount of loan will be disbursed into your account with the bank and you are free

to make withdrawals. Your urgent need is taken care of, and your jewellery is safe with the bank!

1. STATE BANK OF HYDERABAD

THINGS NEEDED FOR GOLD LOAN

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Application form

2 passport size photographs

Copy of the income tax return for last 2 financial years duly acknowledged by

ITO.

Latest salary slip showing all deductions.

TDS Certificate Form 16 in the case of salaried persons

If property offered is an agricultural land converted as non-agricultural, copy of

the relative order should be made available.

In the case of agriculturist a certificate of income issued by the village officer

should be produced.

In the case of individuals engaged in trade/industry etc. wherever latest IT returns

are not available, the annual income can be assessment based on the IT return for

the preceding year and the last balance sheet

Documents to be submitted

Title deeds of the property proposed to be given as security.

Prior title deeds.

Latest tax receipts (both building and land)

Possession Certificate

Encumbrance certificate from the sub registrar for the last 15 years.

After availment of the loan, encumbrance certificate for 4 months after the date of

mortgage is to be produced.

Against deposits Cash Key Facility

Gold Loans Conventional Liquid Gold

Against scrips Mitra Varsha

Personal Loans

Housing Loan SahayaVarsha Computer Loan CarLoan Two WheelerLoan

HOME CASHHome Decor LoanEducationloanSuvidha LoanPrasanthi LoanPrasanthi Elite

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Cash Key facility

The most convenient method of obtaining advance against deposits.

Unlimited withdrawals permitted in a Current account upto 90% of the deposit amount

and interest accrued.

Cheque book facility is available.

Interest charged on these loans will be 1% above the interest rate allowed on the deposit

irrespective of the amount, rate of interest and period

With state bank of Hyderabad Bank's Gold Loan, you can get an instant loan against your gold

jewellery and ornaments. The procedure is simple, documentation is minimal and approval is

quick.

Features & Benefits

Avail Loan up to Rs.10,00,000 & up to 85% of value for any purpose*

Safety & Security of your Gold Jewellery

Loan processed in 30 MinutesATL - Anytime Liquidity

No EMI, Service only Interest and enjoy the Loan facility

Lower Interest Rates - Your savings can be Invested in several Investment Avenues

If you are an SBT Bank customer, we have special rates for you

2. Citi bank

Features of gold loan product;

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Credit limit: You can have a credit limit of up to three times your net monthly income. The gold

Citi credit card has a maximum credit limit CZK 600,000 and the classic Citi credit card has a

maximum limit of CZK 150,000.

The ability to purchase now and repay gradually

Without having to save for a long time, you can finally buy what you have been wanting for a

long time. You can buy it now and repay later in the way most convenient for you, either all at

once or through regular payments. If you decide to pay in regular payments, you do not have to

pay the same amount every month you can decide how much to pay. The minimum monthly

payment is only 3.2 percent of the total balance on your credit card in any month.

Interest-free Loan for up to 55 Days

If you repay the entire amount due in the current month, you receive an interest-free loan for up

to 55 days. How is it possible? If you make a purchase at the beginning of the period, you will

receive an credit card statement in 30 days. If you send your payment within the 25 day

repayment period, you received an interest-free loan for the purchase for 55 days free of charge.

A universally-accepted

The Citi credit card is accepted in more than 48,000 stores in the Czech Republic and theirnumber increases daily. You can also use your card in more than 25 million stores around the

world. If you need access to cash, there are more than 2,700 ATM machines in the Czech

Republic and 600,000 ATM machines abroad. Just look for the MasterCard logo.

Gold loan features

Key features

1.9% p.a. on balance transfers for 9 months

55 days interest free

Complementary rewards program

Complementary international travel insurance

Complementary purchase cover insurance

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Access to Citibank World Privileges

Generous credit limit of up to $25000

Pros

1.9% balance transfer

55 interest free days

Free travel insurance

Free rewards program

Cons

Fairly high annual fee

and purchase rate

ELIGIBILITY

Any individual within the age group of 18 to 75 years is eligible

Minimum and maximum loan amount

Minimum individual loan amount:Rs. 5,000/-

Maximum individual loan amount:Rs. 15, 00,000/-

Loan tenor option; the tenor is 45 days, 12 months & 24 months.

Interest rate;

Citi Bank Loan against Gold jewellery comes to you at attractive interest rates and are

based on the prevailing situation in the market at the time of the loan. The rates vary

according to the product variant

Documents needed

3 passport size photograph

Proof of Identity

Proof of Address

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Account

No. For availing Loan against Gold Ornaments facility you do not require to have account with

ICICI bank. New account opening is also not required.

Guarantor

No. There is no need of Guarantor or Introducer for availing Loan Against Gold Ornaments

facility from ICICI bank.

Interest

The interest rate is fixed & is calculated on the reducing balance.

Additional fee

Yes, there is nominal processing fees ,which will be charged to you.

Approval

Normally takes 20 -25 minutes approximately for the loan to be disbursed.

Repayment

Yes, (Thereon, interest will be charged on reducing balance).You can make part-payment but the

jewels will be released only after the principal amount and interest payment is done.

Prepayment

Yes, the loan can be prepaid; there is a prepayment charges of 0.50% of the loan amount if the

loan is prepaid within three months.

Repayment

You can repay the loan by cash, DD or Account transfer.

Charges levied for late payment

Yes, 2% penal interest on outstanding interest amount

Gold jewellery auctioned

The auction process would have to take place 3 months after the due date of repayment has

passed.

Approach

You can approach us in any of the following ways

1. Call us at our 24 hour customer care center

2. Write to us using the "Email Us" option

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Latest Offers: Citibank Gold

1.9%p.a. for 9 months on balance transfers

Generous credit limit of $25,000

8

Complimentary Rewards Programme

For every dollar you spend, you enjoy one reward point which can be redeemed for a large

range of travel rewards, merchandise, gift cards or cash back on your card. In addition,

your reward points never expire while the card remains open.

Complimentary International Travel Insurance

automatically covers you and your family when you buy your travel tickets with your

Citibank Gold Card. Your cover includes medical and unexpected travel expenses, trip

cancellation, personal liability and loss or damage to personal items.

Citibank World Privileges

its your passport to exclusive upgrades, benefits and discounts at thousands of hotels,

restaurants, shops, shows and services worldwide. With everything from glorious

weekends away to sumptuous dinners in Australia's finest restaurants, you'll find

something to tempt you.

Up to 55 days interest free on retail purchases

Terms & Conditions

Subject to your acceptance you will be billed an annual account fee which is currently $149 for

the Primary Citibank Gold card, and $30 for an Additional Citibank Gold card.

1. The 1.9% p.a. interest rate applies only to balances transferred with this offer for a period of 9

months. Transferred balances will be repaid first. Any transactions made other than with this

offer are at the standard Credit Card rate. The standard Citi Gold credit card rate is currently

20.49%p.a, which is variable, subject to change and Citibank's credit criteria. Interest rates last

updated 7/03/2010.

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2. International Travel Insurance and Purchase Cover is underwritten by Zurich Australian

Insurance Ltd (ABN 13 000 296 640 AFSL No. 232507) and is subject to the Terms and

Conditions and exclusions contained in the Policy of Insurance. Please refer to the Terms and

Conditions sent to you at card opening for a full explanation of cover and exclusions.

3. Rewards are subject to the Citibank Rewards Terms and Conditions. Reward points are not

earned on balance transfers or cash advances. Reward points never expire while the card remains

open. Effective 1 April 2009 Citibank Cardholders will no longer be able to redeem Citi Reward

points for Qantas Frequent Flyer points as part of the existing Citi Rewards program. Customers

can continue to redeem Citi Reward points for Qantas Frequent Flyer points on the existing Citi

Rewards program until 31 March 2009. A Citibank Credit Cardholder must be a member of the

Qantas Frequent Flyer program to redeem Reward points for Qantas Frequent Flyer (QFF)

points. A joining fee applies. Membership of the QFF program is subject to Qantas Frequent

Flyer Terms and Conditions. Gold Cardholders can redeem Reward points at a rate of 1 Reward

point for 1 QFF point, Silver Cardholders can redeem Reward points at a rate of 2 Reward point

for 1 QFF point. All redemption requests must be in blocks of 10,000 Reward points.

4. Citibank World Privileges - payment must be made using Citibank Credit Cards. Privileges

cannot be used in conjunction with any other promotional programs or offers. Citibank and thebusiness establishment reserve the right to change the terms and conditions at any time. Refer to

worldprivileges.citibank.com for up to date offer details.

5. Purchase Cover is underwritten by Zurich Australia Insurance Ltd (ABN 13 000 296 640

AFSL No. 232507) and is subject to the Terms and Conditions and exclusions contained in the

Policy of Insurance. Please refer to the Terms and Conditions sent to you at card opening for a

full explanation of cover and exclusions. Please refer to the Terms and Conditions for a full

explanation of cover and exclusions.

6.Actual credit limit will be assigned based on Citibank's credit criteria

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3. Andhra bank

Purpose

To purchase Gold/Gold Ornaments

Eligibility

Women permanently employed in Central/State Govt Offices, PSUs, Reputed Limited

Cos, Teaching & Non Teaching Staff, Lecturers, Professors and Employees of

Colleges, Universities.

Professional & Self employed women like Doctors, Lawyers, Chartered Accountants and

Agents etc who are having proven Income supported by Income Tax Returns/ Income

Tax assessment under Non-Working Women including Housewives.

Quantum of Finance

Minimum Rs. 20,000/-

Maximum Rs. 2, 00,000/-

Margin

15% of the value of Gold /Gold Ornament to be purchased.

Co-Obligation

Co-obligation can be from any suitable third party including husband/father employed orhaving proven income by way of Income tax return/ income tax assessment.

Security

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A. Hypothecation of Gold/Gold Ornament to be purchased

B. Collateral Security:

In case of Working Women,

No security is required for loans upto and inclusive of Rs. 50,000/-.

Loans exceeding Rs. 50,000/- by way of eligible immovable property and tangible

securities like NSC/KVP/ LIC Policies (Surrender Value)/Govt. Bonds/ Term Deposits of

Andhra Bank in the name of the applicant / co-obligant.

In case of Non-Working Women & Housewives:

Collateral security is waived upto Rs. 50,000/- as in the case of working women provided

the co-obligant is husband/ father either employed or having proven income supported by

Income Tax Return/ Income Tax assessment subject to fulfillment of the following

conditions:

In case of employed Husband/father as co-obligant: Net take home pay of the co-obligant should

not be less than 40% of his gross pay after taking into account the proposed instalment.In case of

Third Party Co-obligant: Collateral security waiver is not allowed even the loan amount is below

Rs. 50,000/-

Repayment

Repayable in 60 EMI

Disbursement

Payable directly to the jewelers by Demand Draft/ Pay Order or by reimbursement on production

of original Bill.

Nature of LoanTerm Loan

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4. Yes bank

With yes Bank's Gold Loan, you can get an instant loan against your gold jewellery and

ornaments. The procedure is simple, documentation is minimal and approval is quick.

Features & Benefits

Avail Loan up to Rs.10, 00,000 & up to 80% of value for any purpose

Safety & Security of your Gold Jewellary

Loan processed in 30 Minutes

ATL - Anytime Liquidity

No EMI, Service only Interest and enjoy the Loan facility

Lower Interest Rates - Your savings can be Invested in several Investment Avenues

Eligibility & Documentation -

You may be a salaried individual, professional or a businessman, we have loan designed

to suit your requirement. All you need is fill a application form and you get loan in 30

minutes.

Eligibility Criteria -

Maximum age of Applicant at loan application should not be more than 65 years

Gold Jewellary should be owned by you or any of the family member.

Documents Required -

Proof of Identity (Passport Copy/ Voters ID card/ Driving License).

Address Proof (Ration card/ Tel, Electricity. Bill/ Rental Agr. / Passport copy/Trade

license /Shop & Est. License./Sales Tax certificate).

Signature Proof (Passport Copy/Driving License/Banker's verification/cheque)

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Passport size photographs.

Benefits of having an Account with the yes Bank

You get preferred interest rates, priority processing and simpler documentation if you have an

Account with yes Bank. This is taken into account at the time of disbursal of the loan.

The main advantage of yes Gold Loan is that, you dont require any Income proof to get this

loan. Even if you fall under the low Income class, you can get Gold Loan. The only thing you

should have is Gold.

Taking a yes Gold Loan

The YES BANK International Gold and Silver Debit Cards give you the recognition and

flexibility to carry your account with you, wherever you go. Launched in partnership with

MasterCard International, this global card gives you unparalleled access to withdraw cash from

innumerable ATMs and can be used to make cashless purchases in millions of establishments

worldwide. With enhanced withdrawal and purchase limits, unique value added services and

easy hot-listing services, your YES BANK Debit Card is one of the most power-packed debit

cards in the country.

Your YES BANK Debit Card has now become e-convenient. You can now also shop online

from the comforts of your home across every category including Apparels, Hotels, Gifts,

Florists, Electronics, Lifestyle goods, Consumer goods, etc, all with your YES BANK Debit

Card. And whats more, be assured of the safety of your transaction each time you purchase

online.

Steps!

Step 1: Choose YES BANK in the Pay by Credit Card option of the Payments section, once

you have finished shopping on any e-commerce website. You will be asked to enter your card

details. Post keying in the same, the relevant facility will be displayed to you for completing your

Registration process.

Step 2: Key in a Personal message that will help you confirm the authenticity of your

transaction each time you shop online. Then select your Hint question from the dropdown list

and answer the same.

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Step 3: Create your own password (i.e., your very own YES BANK MasterCard SecureCode)

to authenticate your current online payment / transaction. This password will be used to

authenticate your future online transactions.

Step 4: Complete the Registration process by accepting the Terms & Conditions displayed.

Once your Master Card Secure Code is generated, you are ready to shop online with your YES

BANK Debit Card. Do ensure that you always keep this Code handy for future reference. Get

clicking with your YES BANK Debit Card today!

Terms and Conditions

Benefits and Features

The YES GOLD Debit Card is the 1st Indian debit card to offer 0% surcharge on petrol

purchase transactions at any petrol pump. Get instant savings of up to 2.5% of the value

of all petroleum transactions

Daily cash withdrawal limit increased to INR 75,000 on Gold and INR 25,000 on Silver

debit cards.

FREE cash withdrawals on GOLD Debit Cards from ATMs displaying the MasterCard,

Maestro, Cirrus, NFS and Cash Tree logos worldwide

Daily purchase limit increased to INR 75,000 on Gold and INR 25,000 on Silver debit

cards from any merchant establishment displaying the MasterCard logo

Personal Accident Insurance* upto INR 200,000 on Gold and upto INR 100,000 on

Silver Debit Card. Know more.

Purchase Protection Insurance* upto INR 50,000 on Gold Card and upto INR 25,000 on

Silver Card. All purchases will be indemnified against any damage caused by fire,

burglary and or theft upto 90 days from the date of purchase. Know more.

Lost Card Liability Protection* your YES BANK debit card is safer than cash. If your

card is lost and you havent made a purchase transaction, you dont need to pay for it.

You are now safe for transactions made on your debit cards upto 7 days prior to reporting

the loss to YES BANK. However, for your safety we recommend that you report the loss

immediately. This insurance is valid for all transactions done at merchant outlets without

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the use of PIN only. This facility does not cover cash withdrawal transactions at ATMs.

Know more.

Special offers on travel, lifestyle and fine dining. Refer your account statements for

regular updates.

Instant updation of your account to reflect your debit card transactions.

International transactions are always reflected in Indian Rupees

Usage Instructions

You can access your account for FREE at over 35,000 MasterCard, CashTree and NFS

ATMs across the country

To access an ATM, you need to use your unique four digit Personal Identification

Number (PIN) in conjunction with the card

You are advised never to disclose your card number or PIN to any individual

If your card is lost or stolen, please report it immediately by contacting us at below

details:

All payments on the reported stolen card will be blocked from the moment we

acknowledge the lost or stolen status of the card.

Use your card to make cashless payments from your account at any establishment that

displays a MasterCard logo. At an electronic terminal, your card works just like a credit

card. Present your Debit Card to the merchant, who will swipe the card at the terminal

and present you with a transaction slip. Please sign the transaction slip. Your account will

be instantly updated to reflect the amount of the purchase

New schemes

Eligibility under the Schemes

Exporters with minimum rating of BB as per risk rating module or Abased on seven pricing parameters will be eligible under this scheme.

Exporters whose accounts have been classified as Standard continuously

for a period of three years and there are no irregularities/adverse features

in the conduct of the accounts will be considered.

The scheme will not be applicable to those exporters who are blacklisted

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by ECGC or included in RBIs defaulters list/caution list or making losses

for the past 3 years or having overdue export bills in excess of 10 per cent

of the current years turnover.

In order to recognize exporters undertaking exports on collection basis, it

has been decided that they will also be considered for grant of yes bank

Expo Gold Card under the above scheme provided they have been dealing

with our bank for a period of atleast three years.

Fixation of Credit Limit

In-principle limits will be sanctioned for a period of three years with a

provision for automatic renewal under this scheme subject to fulfilment of

the terms and conditions of sanction.

Efforts will be made to meet yes bank requirements of the Gold Card

holders by giving them priority over non-export borrowers. Bank will also

consider providing foreign currency term loans to Gold Card Holders on

priority basis.

The maximum time frame for disposal of applications received for

sanction of export credit under the scheme will be as under: -

For disposal of fresh applications 25 days

Renewal/ Review of limits 15 day

Sanction of ad hoc limits 07 days

A stand-by limit of 20% of the assessed limit can be additionally made

available to meet urgent credit needs of Gold Card Holders.

It has been decided that Gold Card Holders will submit their request for

sanction/renewal of credit limits in the simplified application form

(enclosed).

The performance of the exporters is to be reviewed on yearly basis vis--

vis their projections with a view to decide whether benefits of better terms

and conditions given to Gold Card Holder are to be

continued/amended/withdrawn.

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Rate of Interest/Service Charges

Relaxation in interest rates upto 0.25% on rupee export credit based on the

credit ratings of the exporters. The concessional rate of interest applicableupto 90 days on post-shipment rupee export credit will be extended upto

365 days.

Bank will offer discount of 10% in charges and fee structure for various

services/transactions.

Export credit in foreign currency will be provided on priority basis at

LIBOR + 0.75% per annum with service charges at the flat rate of 0.1%

for each disbursement. Bank will also consider providing foreign currency

term loans to these exporters on priority basis.

Tenure

The card will be issued for 3 years and will be renewed automatically for a

further period of 3 years unless there are adverse features/irregularities in

the account. Further, bank will have right to recall the card at any time in

case of any misuse of the card or observance of any violation of the terms

and conditions.

5. MY PRODUCT

Features of my product

Our Gold loan Scheme can help you encash on the gold / jewellery that you have alreadyinvested in to pledge it with the bank and avail loan on the same. The terms and conditions aresimple and documentation is easy. Even the interest rates are down to earth.

Purpose

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Agriculture & Allied activities and General purpose. An overdraft account against pledge of 22carat gold ornaments.

Eligibility

The following are eligible to acquire this loan: Individuals, Partnership & Proprietary Firms. AnyIndividual who is competent to enter into a valid contract and to create pledge except financiers,

jewelers, & jewellary shop owners.

Amount Permissible

Rs.1025/- per gram for Hall marked jewels; Rs.1000/- per gram for Non-Hall Jewels or 80% ofappraiser / market value whichever is less. In case, the market rate of Gold falls below Rs 1250/-per gram, the maximum amount of advance per gram will be Rs 925/- per gram and Rs 950/- per

gram for Jewels and Hall Marked Jewels respectively.

Part Release

Not Permitted.

Loan Quantum

. A minimum of Rs. 25,000 and

Maximum of Rs.10 lakhs.

Nature of Limit

Overdraft. Facility to draw with ATM card is permitted and optional. At any point of time, acustomer should have one GOLD OD account only.

Period of Loan

Two years.

Repayment

Within a period of 12 months. The loan can be renewed after paying interest

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Primary Security

Gold Jewels and Gold Coins (excluding repledge). Condition: Weight and value of the Preciousstones embedded in the Gold Jewels should be disregarded.

Rate of Interest

HM - Hall Mark Jewellery, Non HM - Non Hall Mark Jewellery For Agricultural Purpose (HM / Non HM) Upto Rs. 50,000.00 - PLR - 3.00% (11.00%

p.a.). For Agricultural Purpose (HM / Non HM) above Rs. 50,000.00 - PLR - 2.25% (11.75%

p.a.). For General Purpose (HM) Upto Rs. 2,00,000.00 - PLR - 2.50% (11.50% p.a.). For General Purpose (HM) above Rs. 2,00,000.00 - PLR - 1.50% (12.50% p.a.). For General Purpose (Non HM) Upto Rs. 2,00,000.00 - PLR - 2.25% (11.75% p.a.). For General Purpose (Non HM) above Rs. 2,00,000.00 - PLR - 1.25% (12.75% p.a.).

Current Prime Lending Rate (PLR) is 14.00% p.a.

Minimum Interest

For Agricultural Purpose Rs. 90.00. For General Purpose Rs. 125.00. Minimum 15 days interest for the OD Limit or Above whichever is higher.

Jewel Appraiser Charges

Rs. 4.00 per thousand subject to a maximum of Rs. 100.00

ATM Card Charges

Nil - It's Free...

Penal Interest

Any irregularity or default in repayment will attract penal interest of 2.00% p.a. over and abovethe above rate of interest on the balance outstanding.

Processing Charges

Term Loan: 1.00% of Limit sanctioned without any maximum cap. Working Capital [Fund and Non-Fund Based]: 0.50% of the loan amount without

maximum cap.

Operational Procedures

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Including Servicing of Interest, Folio Charges, etc. - as per extant procedures applicable toOverdraft facility.

Documentation

As applicable to the existing Agriculture Jewel / Ordinary Jewel loans plus OD continuity letterAll the above Terms and Conditions are subject to change and sanctioning of the loans is at thesole discretion of the Bank. Service Tax on All Service Charges extra wherever applicable.

Interest Rate

BPLR - 2.25% fixed with floor level of 12.00%.

Rate per gram changes from time to time.

.

Special Features

Ornaments under safe custody of the Bank, Liquidity of the gold is ensured by sanctioning an

overdraft under pledge of ornaments, Availability of the ornaments for use at any time with

provision for release of the ornaments & re-deposit of the ornaments without any restrictions.

Gold Rush

Quantum of loan - Minimum of Rs.10, 000.

Term of loan - 12 months.

Interest Rate - BPLR - 2.00% p.a

Minimum Interest : Minimum for 5 days or Rs. 50/- whichever is higher.Rate per gram

changes periodically.

Types of Gold Loans offered by us;

Conventional

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Loans against Gold ornaments.

Rs.1100 per gram of gold for all types of jewellery (including hall marked jewellery).

Amount of Loan - Maximum 10 lacs

Period of loan - 6/12 months and can be further renewed

Simple easy documentation.

Liquid gold - Gold overdraft

Overdraft facility against pledge of Gold ornaments, operated as a running account with

facility of cheque book.

Rs.1100 per gram of gold for all types of jewellery (including Hall marked jewellery)

Amount of Loan - Maximum 10 lacs

Loans are granted for 6/12 months and can be further renewed

COMPARISON

COMPARISON OF FEATURES OF GOLD LOAN OF THESE BANKS

Category Citi

ba

nk

Andhra

ban

k

State bank of

Hyderabad

Yes bank My product

Purpose Loanag

ain

st

je

wel

lar

y

Goldorna

men

t

Gold ornaments Jewellary/gold

orname

nts

Generalpurpose

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Eligibility 18-75 Employee

s

Employees/busines

s

Man

Salaried

person

Competent to

enter

valid

contract

Quantum of

finance

5000-

1500

00

0

20000-

200000

20000-1000000 1000000 25000-

1000000

Margin _ 15% _ _ 10%

Co-

obligati

on

Having

an

y

sal

aried

per

son

Employed Business

/employed

Employed Capacity &

conditio

n

Security Gold

je

wel

lar

y

Gold

jewe

llary

Gold jewellary Gold

jewellar

y

Jewellary/gol

d coins

Repayment 12

mo

nths,

2

yea

r

1 year 1_2 year 1 year-3 year 12 months

Disbursemen

t

DD Demand

draf

t

Demand draft D D Demand draft

Nature of

loan

Term

loa

n

Term loan Term loan Term loan Term loan

Part release Allowed Permitted Not permitted Not permitted Not permitted

Interest free

day

limit

55 60 55 55 60

Period of 1_3years 1-2 years 1_3 years 1_2 years 2 years

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loan

Rate of

interest

3%p/m 2.75p/m 2.50p/m 3p/m 11.50p.a

Penal 2% 2% 2% 2% 2%

Processing

charges

Depends

on

am

ou

nt

2% 1_1.75% 1-2% 0.50-1%

ANALYSIS AND INTREPETATION

Gold prices are close to an all time high. Is this a good time to unlock the value of your holdings

in Gold and take a Loan against Gold. If you are in need of Gold, you might be able to borrow

against it. Here we explain to you the basics of Gold Loans. Many people have assets such as

Gold ornaments and jewellary that earn no income because they lie idle at home or in a locker. If

you are in need of a loan, and if you are confident of your ability to repay the loan on time, you

can unlock the value of these assets by taking a Loan against Gold.

THE VARIOUS DIFFERENCES ARE AS

Purpose: the basic purpose of all the banks is to provide this only against jewellary but I

provided it for all purposes to maintain high liquidity.

Eligibility: the basic eligibility by all of these banks is generally for service person, businessman

or employed persons but I provided to all who are competent to act to achieve more customer

value and loyalty to generate more revenue.

Quantum of finance : As Citi bank is providing very high amount of about 15 lacs but I want to

play safe due to which I offer from 25000-10 lacs, so that there will not be possibility of high

NPAS and defaulters which can have bad effect on company.

Margin : As only Andhra bank focuses on margin which leads to deregulation of customers as

they feel it as burden.

Security: As security is necessary for reducing possibility of default so all banks takes gold

jewellary/coins as primary security to maintain high liquidity .

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Disbursement: As all banks believes demand draft as a safe mode of payment without any

charge and loss.

Nature of loan: As the gold loans are for short period so all of them are included in term loans.

Period of loan: As most of the banks has set up the time period from 1 year to 3 years, so as toget profit maximization with in short term for high level development.

Rate of interest: As the interest varies by small amount because of the fact to attract more

customers for revenue generation but I offer annually instead of per month so that customers

may not feel burden on them.

Processing charges: As I had kept very low processing charge to offer more benefit to

customers.

More over we are providing interest free credit up to 60 days so that customer tries to repay loan

within this time and wants to achieve benefit of profit without paying any interest. They can alsoacquire very high benefit by using this interest free credit in good and revenue generating

policies.

Gold Credit Card Benefits

My Gold Credit Card: Its overloaded with travel benefits discounts, cashback offers, air milesredemption. Get a Bank Gold Card and get introduced to a whole new world of privileges.

Attractive Reward Points*Earn 1 reward point per Rs 150 spent on the Gold Credit Card.

Rewards points redemption After earning all those reward points on your OUR Bank GoldCredit Card, redeem them for exciting gifts and services! You could even convert them to airlinemiles with Indias leading airlines through the My Rewards programme.

Worldwide acceptance Accepted at over 23 million Merchant Establishments around theworld, including 110,000 Merchant Establishments in India.

Revolving credit facility Pay a minimum amount, which is 5% (subject to a minimum amountof Rs.200) of your total bill amount or any higher amount whichever is convenient and carryforward the balance to a better financial month. For this facility you pay a nominal charge of just

3.25% per month (39.0% annually).

Free Add-on card You can share these wonderful features with your loved ones too we offerthe facility of an add-on card for your spouse, children or parents. Allow us to offer add-on cardsto you FREE OF COST with our compliments.

Interest free credit facility - Avail of up to 50 days of interest free period from the date ofpurchase (subject to the submission of the charge by the Merchant).

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CONCLUSION

Many people have assets such as Gold ornaments and jewellary that earn no income becausethey lie idle at home or in a locker. If you are in need of a loan, and if you are confident of yourability to repay the loan on time, you can unlock the value of these assets by taking a Loan

against Gold.

You offer the lender your Gold. The lender gives you a loan against your ornaments after a quickevaluation of its purity. The lender will usually not give you the loan up to the full value of theloan, but generally you can get up to 80% of the value. You pay interest on the loan. At the endof the loan, you repay the loan and can take your Gold back from the lender.

There is always a situation when money needs to be arranged for at short notice. It could be a

medical emergency or time to pay off an urgent debt.Whatever the need may be, is it possible to

get a loan instantly, without having to submit reams of documents and waiting for an approval

Secured Loan: Gold Loans are secured loans - you are borrowing against the security ofyour Gold that you give to the lender and in return for which you get the loan.

Purpose: You can use the loan towards any purpose, as long as it is not for any illegalactivity or for speculation in the stock market. Non-banking companies have even fewerrestrictions on what you can use the loan for.

Interest Rate and Charges: Banks are currently charging approximately 12.5% interestfor whatever tenure you take the loan for. They usually have a processing fee for the loanas well. Non-banking companies have 30-60-90 day and other schemes where the rates ofinterest can be approximately 2%+ per month. Annually, this works out to be about 27%per annum, which is a very high rate of interest. Non-banking companies usually don'thave a processing fee for the loan.

Loan Amount: Lending can start at amounts as low as Rs 25,000, but some banks canlend you anywhere from Rs 10 lakhs up to Rs 75 lakhs, depending upon the value of yourGold. The non-banking companies usually deal in much smaller loan amounts becausethey often cater to a different kind of customer base. None of these two types of lenderscharges an evaluation fee for your Gold.

Repayment Terms: Banks usually have terms that run from 3 to 12 months, but you can prepay atanytime. At non-banking companies you can choose the term that you want, andaccordingly select the loan that suits you.

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REFERENCES:

rbi docs.rbi .org.in/rdocs/Bulletin/PDFs/78680.pdf

www.rbi.org.in/scripts/NotificationUser.aspx?Id=2615

www.icrier.org/publication/WORKING_ PAPER _215.pdf

cab.org.in/.../ Financial %20 Inclusion %20%20The%20 India n%20Experience/Universal

%20 Financial %20 Inclusion %20in%20 India %20-.

www.idrbt.ac.in/.../India nBank%20-%20KC%20Chakravathy.pdf

www.mpf.org.in/pdf/...%20 papers/The%20Eko%20Series%20on

%20 Financial%20 Inclusion %20White

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%2020Mar08...

http://planningcommission.nic.in/reports/genrep/rep_fr/cfsr_all.pdf

www.nabard.org/.../ Financial%20lnclusion%20and%20SHGs.pdf

dspace.iimk.ac.in/bit stream/2259/485/1/271-286+.pdf

www.iimb.ernet.in/microfinance/ramnagar/index.../fin_inlcusion. pdf

www.iba.org.in/events/ITEnabledFinInclCover. pdf

cysd.org/Rural Livelihood/.../ Financial %20 Inclusion %20-%20draft.pdf

www.rbi.org

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BIBILOGRAPHY

FINANCIAL INSTITUTIONS & SERVICES BY MITTAL

VAISHLEY AND MITTAL(2010) INSURANCE SECTOR

BANKING & INSURANCE BY A.M. RASTHOGI

INDIAN ECONOMY 2010 BY GEETIKA GHOSH GUPTA

RBI AND FINANCIAL INSTITUTIONS BY SANDEEP VOHRA

PERSONAL FINANCE2010 BY J.ROBBINSON

Personal Finance Term Paper

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