If you want to take a loan against gold from the State Bank of India, then you must know things that can cause rejection of the loan, so that you are better prepared during loan application and prevent any possibilities of loan disapproval. Here we list down reasons for SBI gold loan rejection that you must consider.
- Unacceptable Type of Gold
SBI and other banks do not accept gold asset other than jewellery and coins. If you intend to pledge gold coins, these must be purchased from a reputed bank, and not any other outlet, shop etc.
- The coins should not weigh more than 50 grams. Similarly, the jewellery needs to be of at least 15 grams. Fake gold is not allowed. Purity of the jewellery also matters.
- The gold has to be of minimum 18 carats to 24 carats. More the purity and weight of gold, greater will be the loan amount.
- Gold plated ornaments will not be eligible for the loan. Similarly, other precious gems and materials from the ornament will not be considered to calculate loan amount.
- Those wanting a loan against gold for agricultural purpose must show proof to SBI that they have a legit piece of land or agricultural business for which the loan is needed.
- Insufficient Gold
If you wish to take Rs. 1 lakh as loan, but after gold’s evaluation and bank’s margin, the amount of gold can justify only Rs. 50,000 as loan, then your loan will be rejected. Sufficient amount of gold is required not only in terms of weight and purity, but also in amount that can satisfy your fund requirement. In such cases, if you can settle for a lower amount of State Bank of India gold loan than what you need, then you may get the loan against gold approval.
- Incomplete Documentation
PAN card and Aadhar card are two essential documents that are mandatory for a gold loan. If you do not have either of these documents, then the loan can be disapproved. You have to also provide residence proof, your recent photographs, and other proof as demanded. If you are taking a State Bank gold loan in the city you currently reside in, you have to submit proof of residence, be it in form of rental agreement, utility bill, house registration proof etc. If you cannot produce local residence proof, the loan will not be approved.
- Relationship with State Bank of India
The State Bank of India has stringent rules for gold loan. In case you have defaulted at a loan with SBI in the past, or have been in consistently bad terms with the organization, there is a greater risk of having the loan application rejected from this bank. Thus, if you wish to apply for SBI gold loan then make sure you retain a good relationship with this bank, or you should make amends and try again.
Why You Should Repay the State Bank Gold Loan in Time?
That being said, remember that if you default at gold loan repayment even after constant reminder, there is a possibility that SBI will auction off the gold you deposited with them.
- While losing the gold asset may seem as a solution to pay for the unpaid amount, it is not a wise decision.
- You can take future loans against gold, liquidate the asset when necessary, and even treat the same as investment.
- Also, maximum loan amount against the gold can be up to 75% only, thus you lose the additional 25% as well.
- Repay on time and as per the terms of the loan agreement and the financial institution will return you the pledged asset in good condition.
The above-mentioned information will make you aware of the reasons for SBI loan against gold rejection and why repaying the gold loan in time is important. Consider these pointers before you apply with the State Bank for a gold loan.