The practice of savings in relation to the underprivileged greatly varies when judged against the affluent sections in India. It has been observed in this regard that the wealthy are prone towards spending or employing their savings in various forms of assets whereas, the underprivileged still carry on spending their savings largely on gold. This practice is majorly observed in the rural parts where banks lack proper access.
Another contributing factor towards such a tendency can be attributed to the cultural aspects prevalent in India owing to which gold is perceived to be an asset along with making it wanted. Gold in a way aids to guard the savings against any sort of inflationary depression.
Situations of crisis cannot be ruled out in one’s life which calls for the requirement of accumulating or managing funds in no time. Raising funds with the help of gold loan is considered to be ideal for such times of need where there is an instant necessity of cash. Gold can be offered as a form of security to the financial institutions for availing loans instantaneously. Loan against gold is measured to be a secured form of deal by the financial institutions owing to the constant augmenting value of gold.
This form of loan entails a time period of 12 months and is capable of being closed out at any convenient time. The interest charged ranges from 10 to 12 percent and eliminate the need of regular installments as only the interest on such loans are needed to be paid. In case of untimely interest payments, an extra 2% is demanded by the lenders to be paid.