Terms to Know
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.
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).