The amount of loan that can be sanctioned depends upon factors such as purity of gold, form (bars or jewellery), tenure of loan etc.The amount of loan depends upon the kind of security that is deposited in the form of gold and the applicant's repayment capacity. Photograph, PAN, identity proof and address proof have to be provided with application.Once the application is submitted, a gold loan agreement is signed between the customer and the bank. Next, the gold that has been valued is deposited with the bank for disbursal of loan. The bank keeps custody of gold till loan is repaid. Loans typically have tenure of 12 to 18 months.A loan processing fee as well as gold valuation fee is charged.If there is a default in repayment, the bank or fi nance company can sell the gold that is hypothecated and recover its dues as per the terms of loan agreement.1.

Source: Economic Times January 08, 2018 00:56 UTC