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G. Madhan

ARE you a woman who wants to invest in gold? Corp Mahila Gold, a new scheme from Corporation Bank, now offers loans up to Rs 2.5 lakh to buy this "currency without borders".

Under this scheme, both employed and unemployed women can either purchase gold/gold ornaments from reputed jewellers or gold bars from the Bank.

Pre-requisites: You need to be a resident Indian in the 18-58 age group. Working women (both government and private sector employees) can take this scheme by maintaining a salary account with the bank. If your salary is not routed through the bank, an undertaking letter from your employer to remit the monthly EMI (equated monthly instalments) from your salary is required. For the non-working women, the spouse/other close relative who has income proof shall become the co-applicant for the loan.

Quantum of loan, margin money and repayment period: You can take a minimum of Rs 10,000 and a maximum of Rs 2,50,000 through this scheme.

However, the amount you can take depends on the take-home salary/assessed income and your relationship with the bank (whether you hold a salary account or not). The scheme will finance 85 per cent of the cost of gold; the rest needs to be borne by you. You need to repay the loan within 60 months in EMIs, which will, and should, not exceed 50 per cent of the take-home salary/assessed income.

Security: If you are routing your salary through the bank, security is not required for loans up to Rs 50,000. If you are not, an undertaking letter is required from your employer to deduct EMI. However, loans above Rs 50,000 requires collateral security such as the NSCs (face value), LIC policies (surrender value), government bonds, KVPs, and so on. For non-working woman, security is required, regardless of the size of the loan.

Rate of interest and service charges: The bank charges an interest of 11.5 per cent for loans up to Rs 50,000 and 11 per cent for ones above that, if they are secured. However, for unsecured loans it charges 12.25 per cent. Also, for loans above Rs 50,000 a service charge of 0.5 per cent is levied.

Suitability: The product may be suitable for women who cannot afford to invest a lumpsum in gold/jewellery purchases and, thus, have to borrow. As borrowings go, the rates offered under Corp Mahila Gold are more attractive than those on offer in personal loans.

A word of caution: Gold prices have risen sharply over the past one-year. Therefore, anybody purchasing gold/jewellery at the current prices will have to factor in the possibility of erosion in the value of their purchases, if prices fall.

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