CHENNAI: A week after the launch of the Thaai Maaman Thanga Mothiram Thittam, under which newborns delivered at government health facilities are given a one-gram 22-carat gold ring, the cooperation department has raised the limit for gold loan amount offered by cooperative banks and societies from Rs 7,000 per gram to Rs 10,000 per gram against gold jewellery.
Around 441 kg of gold could potentially enter the market each year through the scheme, as the state records an annual average of around 4.4 lakh deliveries in government hospitals.
So far, at the cooperative banks and societies, consumers could avail themselves of a maximum gold loan amount of Rs 7,000 per gram or 75% of the value of the pledged gold, subject to a ceiling of Rs 7,000 per gram. For loans with a tenure of less than six months, the loan amount was permitted up to 75% of the monthly average value of gold without a ceiling.
The gold rate stood at Rs 13,675 per gram on Monday. Private commercial banks offer gold loan amount of around Rs 9,600 per gram to Rs 10,400 per gram, public sector banks offer around Rs 8,800 to Rs 9,300 per gram, while private pawn brokers, loan-based NBFCs and trading companies offer around Rs 10,500 to Rs 11,000 per gram.
The interest rates charged by banks range from 14% to 18%. Last year, the cooperation department increased the interest rate on gold loans from 12% to 13%. Sources said the move is aimed at ensuring that the economically weaker sections do not rely on private moneylenders or pawn brokers for gold loans. An official said, “The increased limit will encourage more people to approach cooperative banks.”
Meanwhile, during a meeting held at the office of the registrar of cooperative societies, a decision was made to cap the profit margin of Primary Agricultural Cooperative Credit Societies (PACCS) at 2.25%. The interest rate charged by the PACCS for gold loans availed through cash credit from central cooperative banks should be 1.25% lower than the interest rate charged for gold loans extended by branches of central cooperative banks.