Did you know you can unlock the value of your investments without selling them? If you hold Sovereign Gold Bonds (SGBs), you can use them as collateral to secure a loan, giving you access to liquidity while still benefiting from potential gold price appreciation and interest payouts. Banks determine your loan eligibility based on a percentage of your bond’s market value, ensuring you get the funds you need without disrupting your long-term investment strategy.
And it’s not just gold bonds—many types of bonds can be pledged to secure a loan, helping you meet financial needs without liquidating your assets.
So, why sell your investments when you can get a loan against them? Apply now
Did you know that your investments can help you unlock liquidity without selling them? Bonds, including Sovereign Gold Bonds (SGBs), can be used as collateral to secure funds, allowing you to meet urgent financial needs while retaining ownership. This means you continue to benefit from potential market appreciation and any interest or dividends your bonds generate. By pledging your bonds instead of liquidating them, you maintain your long-term investment strategy while gaining access to the funds you need.
No matter the type of bonds you hold, you can leverage them for instant liquidity.
Secure loans up to 95% of your bond's value. Apply now!
What is a loan against SGB?
A loan against Sovereign Gold Bonds (SGB) allows you to borrow money by pledging your SGB holdings as collateral. Banks and financial institutions offer this secured loan, typically at lower interest rates than unsecured loans. The loan amount depends on the market value of your SGBs and the lender’s policies. This option is ideal for those needing liquidity while retaining ownership of their gold investment.
Eligibility criteria for loan against SGB
Loan against sovereign gold bonds eligibility criteria are:
- SGB holder requirement: Applicants must be the legal holders of Sovereign Gold Bonds.
- Age requirement: Minimum age as specified by the lender, typically 18 years.
- Minimum SGB value: Some lenders may require a minimum bond value for eligibility.
- Income proof: Verification of income may be required, especially for higher loan amounts.
- KYC compliance: Applicants need to provide complete KYC documents.
- Credit check: A good credit score may improve eligibility with certain lenders.
Required documents for loan against SGB
| Document Type | Details |
| Mandatory documents | 1 recent photographPAN or form 60 (in case PAN is not allotted)Any one of the officially valid document |
| Officially valid document | Passport, Driving License, Aadhaar, , Voter ID, NREGA Job Card, Letter issued by National Population Register |
| Income proof | Salary slips, bank statements, or ITR |
| SGB ownership proof | Bond certificate or proof from issuing authority |
| Application form | Duly completed loan application from lender |
How to apply for a loan against Sovereign Gold Bonds: Step-by-step guide
Here are the simple steps to apply for a loan against SGBs, from eligibility checks to loan approval and repayment.
Step 1: Check lender eligibility
Confirm that your bank or financial institution offers loans against SGBs and review their eligibility criteria, loan terms, and interest rates.
Step 2: Gather required documents
Prepare necessary documents, including your identity proof, address proof, SGB certificate, loan application form, and any other documents required by the lender.
Step 3: Submit your application
Visit the bank or apply online (if available) by filling out the loan application form and submitting the required documents.
Step 4: Pledge your SGBs
The lender will evaluate your SGB holdings and place a lien on them as collateral for the loan.
Step 5: Loan approval and disbursement
Once the lender verifies your documents and assesses the loan value, they will approve your loan and disburse the funds to your account.
Step 6: Repay the loan
Repay the loan in EMIs or as per the agreed terms. Once fully repaid, the lender will release the lien on your SGBs.
Benefits of taking a loan against SGB
- Liquidity without Sale: Access funds while retaining your SGB investment.
- Lower Interest Rates: SGB loans often come with lower interest rates compared to unsecured loans.
- Quick Processing: Simplified procedures for faster disbursement.
- No Physical Gold Required: Unlike traditional gold loans, SGBs act as digital collateral.
- Flexible Loan Amount: Loan is determined by SGB’s current market value.
Loan amount and interest rates
| Feature | Description |
| Loan Amount | Upto 75% of the current SGB value |
| Interest Rates | Competitive rates, generally lower than personal loans |
Tenure and repayment options
Loans against SGBs usually offer flexible tenure options, which can vary from short-term to medium-term durations, depending on the lender’s policies. Repayment options typically include monthly instalments or a bullet repayment option at the end of the loan term. Many lenders also permit partial prepayment or early loan closure without heavy penalties, providing flexibility to borrowers. These options allow applicants to tailor the repayment schedule to their financial needs, helping them manage cash flow efficiently.
Risks and considerations
While taking a loan against SGBs provides liquidity, it also involves certain risks. Defaulting on repayment can lead to the lender liquidating the SGBs to recover the loan amount, causing a loss of the investment. Additionally, interest costs can add up over time, especially if the loan term is extended. Market fluctuations in gold prices can affect the valuation of SGBs, potentially impacting the maximum loan amount. Borrowers should carefully consider these factors, assessing the overall cost and potential risks before proceeding with a loan against their SGBs.
Conclusion
A loan against Sovereign Gold Bonds (SGBs) offers a convenient way to access funds while retaining ownership of the investment. This option provides liquidity without selling assets and often comes with favourable interest rates compared to other loan types. SGB loans are generally easier to obtain, with streamlined eligibility and documentation requirements. However, borrowers should assess the interest costs and repayment terms, ensuring that they align with their financial plans. Overall, a loan against SGBs can be a strategic choice for meeting urgent financial needs without disrupting long-term investment goals.
