Federal Bank offers overdraft facility against gold loans
Mumbai: Kochi-based Federal Bank, which has seen high growth in its gold loan book in recent months has introduced a new facility that offers an overdraft facility against pledged gold.
'Easy Gold', which the bank claims is the first such product in the country, offers a debit card with an overdraft facility using which customers can withdraw money or use loan amount through any ATM or PoS (point of sale) terminals.
It also offers cheque book facility to its gold loan customers under the new offering, which allows a customer to get up to 75 percent of the market value of the yellow metal. Under the product, interest will be applied only on the amount utilised and the loan will be sanctioned for a period of up to three years with amount up to Rs 75 lakh, the private lender said on Wednesday.
On Tuesday, Federal Bank Managing Director and Chief Executive Shyam Srinivasan had said he expected to maintain a 15 percent high growth in gold loan book on the back of a 25 percent spike in advances against gold in the June quarter.
Since April, banks have been witnessing more footfalls at their gold loan counters after the RBI clamped down on pure-play players in the segment like Muthoot Finance, Manappuram Finance and Muthoot Fincorp, among others, by limiting the loan to value (LTV) at 60 percent. Earlier, these NBFCs were offering over 80 percent LTV to customers.