Interest Rate Policy
Sai Gold OGL's Gold Loan Interest Rate Policy determines interest rates through a fair, structured, and fully transparent methodology, guided by RBI guidelines, market conditions, and our commitment to responsible and affordable lending.
Our Commitment to Fair and Transparent Lending
At Sai Gold OGL, we believe every borrower deserves clarity on how interest rates are determined. This Interest Rate Policy outlines the principles and methodology we follow when setting interest rates across our Gold Loan and other loan products, ensuring fairness, regulatory compliance, and alignment with market standards.
Interest rates are determined by the Board of Directors or an authorised Committee, guided by this policy document, applicable Reserve Bank of India (RBI) guidelines, and prevailing market conditions.
How We Determine Interest Rates
The interest rate on any loan at Sai Gold OGL is not arbitrary. It is arrived at through a structured evaluation of multiple factors including cost of funds, operational overheads, a fair return on capital, and the risk profile of each loan scheme. RBI guidelines and market benchmarks are also strictly followed.
For Gold Loans, the interest structure consists of three key components:
- Basic Interest Rate
- Risk Interest Rate
- Penal Interest Rate
Gold Loan Interest Structure
1. Basic Interest Rate
The Basic Interest Rate is the foundational rate applicable to all gold loan schemes, regardless of the associated risk level. It is calculated by considering the following cost components:
Cost of Working Capital Funds
This includes all interest and charges payable by Sai Gold OGL on borrowed funds, such as bank borrowings and Non-Convertible Debentures (NCDs). The cost of servicing these funds is a primary input in setting the base rate.
Overhead Costs
Operational expenses such as employee costs, branch establishment charges (rent, electricity, water), security infrastructure (guards, CCTV, burglar alarms), insurance premiums for gold in custody, statutory expenses, and marketing costs are factored into the base rate.
Fair Return on Capital Employed
As a publicly listed company, Sai Gold OGL is accountable to its investors. A fair and industry-standard return on capital employed is incorporated into the rate structure to ensure the long-term sustainability of the business and to serve the interests of our shareholders.
Market Conditions
We regularly evaluate interest rates offered by other banks and NBFCs for comparable loan products. This ensures that our rates remain competitive while continuing to reflect our actual cost structure and regulatory obligations.
2. Risk Interest Rate
The Risk Interest Rate varies based on the credit risk associated with each specific gold loan scheme. Key considerations include:
- Loan-to-Gold Ratio: Schemes offering a higher advance against the same weight of gold carry a higher risk interest component.
- Loan Tenure: Longer loan periods naturally carry a higher probability of risk events, and this is reflected in the rate.
- Inherent Gold Loan Risks: Factors such as fluctuations in gold prices, purity concerns, and legal complexities in cases of deceased borrowers are also accounted for.
Rebate on Timely Interest Payments
Sai Gold OGL encourages responsible borrowing. Customers who service their interest within prescribed slab periods, such as 30, 60, or 90 days, are eligible for interest rebates. The earlier the repayment, the higher the rebate and the lower the effective interest rate.
For example, a scheme sanctioned at 24% per annum with a rebate of 12.1% for payment within 30 days would result in an effective rate of just 11.9% for timely payers. If the borrower misses the repayment window, the rebate reduces and the applicable rate adjusts accordingly from the date of loan origination.
The rebate is an offer extended to the borrower, and it is entirely their choice whether to avail it. Sai Gold OGL may also, at its discretion, extend concessions based on individual merit.
3. Penal Interest Rate
A penal interest rate is levied when a borrower does not repay their loan within the contracted period of 365 days. This is charged as an additional rate over and above the regular interest on the outstanding balance from the date the loan becomes overdue, compounded monthly.
Penal interest serves two purposes: it acts as a deterrent against default, and it helps cover any potential losses should the outstanding liability exceed the realisable value of the pledged gold.
Method of Interest Calculation
Interest is calculated for the actual number of days the loan remains outstanding, from the date of disbursement to the date of closure.
- For gold loan schemes with a minimum effective interest rate above 11%, a minimum interest of 7 days is charged if the loan is closed within 7 days.
- For schemes with a minimum effective interest rate of 11% or below, a minimum interest of 15 days applies if closed within 15 days.
- A minimum interest charge of ₹50 applies if the computed interest falls below this amount.
- Interest is calculated on a monthly compounding basis, with a year reckoned as 365 days.
- If an interest due date falls on a Sunday or public holiday, Sai Gold OGL may, at its discretion, grant a grace period.
Complete details of the applicable scheme rate and rebate slabs (3 months, 6 months, 12 months, etc.) are clearly stated in the pledge form and the sanction letter issued to each borrower.
Our Promise to Borrowers
Sai Gold OGL is committed to full transparency in lending. All applicable interest rates, rebates, charges, and repayment terms are clearly communicated to borrowers upfront in the pledge form, sanction letter, and on our website, so you can make informed financial decisions with complete confidence.
For any queries regarding our interest rates or loan terms, please contact your nearest Sai Gold OGL branch or reach out to our customer support team.