Penal interest is charged as penalty for non-repayment of the loan dues within the contracted period of 365 days as per loan terms and also to compensate the possibility of a loss in the event of liability exceeding the realizable value of gold given as security. Penal interest will be levied by charging an additional rate of interest for the overdue period and hence will be subjected to compounding on a monthly basis after the loan becomes overdue.

Risk Interest shall be determined by taking into account the degree of credit risk involved in loans under each loan scheme. While the interest rate shall be the lowest for the schemes where advance amount vis-à-vis the weight of gold is the lowest, it shall be increased for schemes offering higher advance amount for the same weight. Further, irrespective of the scheme, the risk interest shall also be determined after taking into account the tenure period of the loan as the probability of risk incidents goes up with the passage of time.

Basic Interest Rate represents the rate chargeable under every Gold Loan Scheme irrespective of the risk weight attached to the nature of the scheme. Basic Interest shall be arrived at after considering the following aspects: