Terms to Know

Consumer Voice - - Bfsi -

Gold caratage

It refers to the unit that mea­sures pu­rity of gold – 22 carat or 18 carat. Caratage is an im­por­tant vari­able as RBI re­quires the banks to take the pu­rity of gold of­fered as se­cu­rity and in­ter­pret it into 22 carat pu­rity for the pur­poses of gold loan.

But there is no such con­ver­sion to be done by NBFCs and they in­vari­ably ac­cept the gold as it is. As RBI has di­rected the banks and NBFCs to max­i­mize the gold loan up to 75 per cent of the cash value, banks/NBFCs ap­ply this di­rec­tion to as­sess the loan amount as the value of gold or 75 per cent of the cash value, which­ever is less.

Gold (per gram) value

This is the ru­pee value of gold per gram at the no­ti­fied gold rate (as ap­pli­ca­ble to or­na­ments/ jew­ellery), which is men­tioned by banks/ NBFCs in their brochure. The value is im­por­tant but not in­flu­en­tial from the con­sumer’s point of view.

Fore­clo­sure charges

This is the charge levied by banks/NBFCs for pre­ma­ture clo­sure of gold loan ac­count when the loan is closed be­fore the ten­ure (pe­riod of loan).

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