What are the Typical Interest Rates and Fees for MSME Gold Loans?

When availing of a gold loan for their business needs, MSMEs (Micro, Small, and Medium Enterprises) can expect to pay certain interest rates and fees charged by the loan providers.

Typically, gold loans for MSMEs carry variable interest rates that range from 9% to 15% per annum. The actual interest rate is dependent on factors like the loan amount, tenure, LTV ratio and the credit profile of the applicant/MSME. Financial institutions generally charge higher rates for larger loan amounts, longer tenures and applicants with lower creditworthiness.

In addition to interest rates, financial institutions levy certain fees and charges on MSME gold loans. Processing or documentation fees are typically up to 5% (or more) of the loan amount, with some loan providers having a minimum fee requirement.

Stamp duty charges, as stipulated by state laws, also need to be paid upfront and deducted from the loan amount disbursed. Other common fees include convenience fees for releasing pledged gold, penal interest for delayed Equated Monthly Instalment (EMI) repayments, and minimal prepayment and foreclosure charges.

While the overall fees and interest will vary from one financial institution to another, MSME gold loan applicants must assess both interest rates and charges to determine the competitive pricing offered by different loan providers.