GOLD LOAN FAQs
Updated as on March 13, 2013
1. What are the
different schemes presently available under gold loans?
§ Super Loans
§ Easy Loans
§ Xpress Loans
§ Real Value Loans
§ True Value Loans
§ Fair Value Loans
2. What is the
need for so many schemes?
We are giving options to customers to choose
different interest rates depending on the difference in rate per gram.
3. What is the
period for which gold loans are sanctioned?
12 months
4. What is the
rate of interest charged by MFIN on gold loans?
Our interest
rates range from 15% to 24%.
5. How is interest
calculated when there are different slabs?
The lower interest rate will be charged for
the first slab period and the higher interest will be applicable from the date
of commencement of the next slab period. For example in the case of a True
Value Loan, the interest rate will be 15% for the first 3 months, 18% for the
next 3 months and 21% only for period exceeding 6 months.
6. When the
interest rate slab changes do we charge the higher rate of interest from the
beginning of the loan?
No. The higher interest will be
applicable with effect only from the commencement of the next slab period. For
example, if a customer had availed a loan under True value loan on 01.07.2012,
up to 30.09.2012 the rate applicable will be 15% per annum, which is the first
slab and from 01.10.2012, the next slab rate of 18% will be charged.
7. Do we charge
penal interest on overdue loans?
No. We have stopped charging
penal interest on any loans and only the rate of interest mentioned in the loan
document will be charged even if the loan is outstanding for more than 12
months.
8. Are there any
hidden charges apart from the interest?
We do not charge any processing
fee, appraisal, prepayment penalty or penal interests which are often charged
by our competitors. Moreover interest is charged only on actual number of days
(minimum 7 days).
9. What are the
recent changes in the interest rate structure?
We have stipulated a maximum cap
of 24% for our interest rates.
We have stopped charging any
penal interest.
We have introduced monthly
compounding system.
10. How is the
interest calculated? What are the benefits to the customer under the new rate
structure?
Earlier we were charging
interest as high as 29% for loans up to 6 months plus penal interest in the
case of overdue loans. Now we are charging maximum interest rate of 24% for
period up to 18 months and penal interest has been withdrawn completely.
11. What is meant
by compounding the interest monthly?
Compound interest means that if
the interest is not paid every month, then the interest for one month will be
added to the principal amount and the interest for the second month will be
calculated on the basis of the total amount. This process will be repeated for
3rd month, 4th month and so on. Our software will automatically give effect to the above
method of calculation at the time of closure of the loan.
This is the same method by which
all banks charge interest on their gold loan. When a scheduled bank says that
its interest rate on gold loan is 14%, it is 14% compounded.
12. What is the
quantitative effect of the monthly compounding system on the interest rate?
The effective simple interest rate for a loan @24% compound interest at the
end of three months will be 24.82%, at the end of 6 months will be 25.32% and
at the end of 12 months will be only 26.82%, which is the maximum rate of
interest charged by us.
13. What is the
quantum of loans available on gold ornaments?
We sanction loans for 40% to 60% of the value of the ornaments depending on
the scheme chosen by the customer.
14. Is our advance
rate per gram competitive when compared to the rates offered by other players
especially Banks?
As on date, we are giving per gram rate even up to Rs.2100/- which is
comparable to if not higher than the rates offered by other competitors/Banks.
15. What are all the Strengh of Our
Company?
125 years of legacy and trust
reposed by our valued customers
Our ability to disburse the loan
very quickly with minimum processes
Our wide network of Branches
spread all over the country
Our experienced staff who are
extremely friendly to the customers
16. What is a probable
loss account?
A probable loss account is a loan account where the outstanding in the loan
account together with interest due is more than the sale value if it is
auctioned. We should call up such customers and get the loan closed or collect
the interest due and renew the loan.
17. When does a
loan become NPA?
In our context all loans outstanding for more than 18 months are considered
as NPA
18. What is the
Importance of interest collection and how to improve it?
As interest on gold loan is our
only source of income, the net profit of the company has a direct bearing on
interest collection. Therefore it is important that all the branches strive
hard not only to achieve their interest collection targets but to exceed the
same.
19. Why we are
sending notice to the customers after 3 months, 6 months, 9 months, 12 months
etc.?
We are sending notices to customers so that they can come and pay the
interest and reduce their interest burden.
20. When do we go
for auction of the pledged ornaments to recover the loan amounts?
We go for auction of the gold ornaments only as a last resort. We give
every opportunity to the customer to redeem the gold and also permit renewal of
the loan by remitting only part of the interest due so as to give more time to
the customer.
In
unavoidable situations we go for auction only after giving sufficient notice
and after publishing the same in local newspapers for information of the
customer/general public.
21. Can we auction
an ornament without sending registered notice to the borrower?
As per the Fair Practices Code prescribed by
the RBI we are mandatorily required to send registered notice to the customer
and also notify the borrower/public about the auction by means of newspaper
advertisement.
22. How do we
improve customer service?
All staff members should be
thorough with our systems and procedures.
All staff members should have
full knowledge of all products of our Company and the competitive advantage
of our products vis a vis similar products of competitors.
Be ready to greet the customer
with a smile and thank you.
Complete the transactions within
the shortest possible time.
23. How do you
handle a complaining customer?
Give a patient hearing to the complainant.
Never argue with a complaining
customer.
Remember “customer is always
right”.
Even when we are unable to
accede to the request of the customer, do not tell him that
he is wrong.
