What are the Repayment Terms for Gold Loans for MSMEs?

When availing of a gold loan, it is important for MSME ((Micro, Small, and Medium Enterprises) borrowers to understand the repayment terms and structures offered.

•  Repayment tenures are flexible, ranging from a few months to a few years. Longer periods allow smaller Equated Monthly Instalments (EMIs).
•  Monthly, quarterly or half-yearly repayment structures can be chosen based on cash flows.
• Principal plus interest repayment is done through EMIs as per schedule.
• Some financial institutions may offer a moratorium period where only interest needs repayment. Principal EMI starts later.
• Early repayment or foreclosure of a loan is permitted by paying applicable foreclosure charges. Some loan providers may not charge a foreclosure or prepayment charge.
• If EMIs are missed, penal interest is charged along with late payment fees.
• On repayment of the entire loan amount, the gold pledged is returned to the borrower MSME.
• A good repayment track record may enhance loan amount eligibility and LTV ratio.