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Gold Loans in India

Take care of a temporary cash flow crisis with your idle gold

With the rise in price and demand for gold, taking a loan against this precious metal is also becoming a highly popular financing option for Indians. Rather than leaving your gold jewellery at home, you can unlock more value by availing gold loans to fuel your immediate cash flow needs.

In this guide, we’ll cover how gold loans work, which providers offer them and how you can find one that suits your needs.

Compare a range of Gold Loans in India

Name Product Interest Rate Processing Fee Loan Amount Loan Tenure
IIFL Gold loan
9.24% p.a. - 24% p.a.
₹ 0 onwards depending on scheme availed
₹3,000 to ₹10 lakh
3 to 11 months
Meet urgent liquidity needs in as fast as 30 minutes. Benefit from a range of flexible loan tenure, repayment options, and competitive interest rates.
Muthoot One Percent Loan
12% p.a. - 12% p.a.
0.25% to 1% of loan amount
₹1,500 to ₹2 lakh
7 days to 12 months
Enjoy the lowest interest rate with this 12-month gold loan scheme when you pay the interest in full every month.
SBI Personal Gold Loan
7.5% p.a. - 7.5% p.a.
0.50% of the loan amount + applicable GST
₹20,000 to ₹50 lakh
3 to 36 months
Pledge your gold ornaments and borrow up to ₹ 50 Lakhs for a maximum of 36 months. Only minimum paperwork required.
ICICI Bank Gold Loan
ICICI Bank Gold Loan
12% p.a. - 16% p.a.
0.25% to 1% as per the loan amount
₹10,000 to ₹10 lakh
6 to 12 months
Fulfill personal or business expense requirements instantly by pledging gold jewelry with at least 18-carat purity.
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Top gold loan providers in India

What are gold loans?

A gold loan, also known as a loan against gold, is a secured loan whereby a borrower can avail from a lender with gold ornaments as collateral.

The loan amount offered is typically a percentage of the gold’s value. Borrowers will then be required to repay it through instalments (which may be monthly or other specified repayment schedules, depending on the loan terms) over the loan tenure, along with the interest rate to redeem their gold articles.

Like personal loans, there are no restrictions on the usage of a gold loan. So whether it’s used to fund a wedding, vacation or a medical emergency, a gold loan is a simple and convenient way to fulfil sudden financial needs.

Significance of gold in Indian culture

For most Indian households, gold remains the most preferred avenue of investment. Most importantly, gold is an integral part of Indian culture and history. Be it weddings, festivals or religious ceremonies, gold will be donned by both men and women alike.

According to the London-headquartered World Gold Council (WGC), Indian households may have accumulated up to 25,000 tonnes of gold (in the form of ornaments, coins, and even gold bars) in 2019. In Refinitiv’s GFMS Gold Survey 2019, India holds the top spot when it comes to buying gold jewellery for the fourth quarter of 2019, at a whopping 136.6 tonnes.

With that much gold kept at home, it is no surprise that Indian lenders are rapidly tapping into the potential value of this precious metal, by digitising the centuries-old practice of borrowing against gold. At the same time, the Indian population is also starting to realise the immense potential they can unlock by availing gold loans and leverage it effectively to meet their liquidity needs. This has led to the sudden spike of gold loans over personal loans.

How do gold loans work?

The process for loan applications may vary from lender to lender, but taking out a gold loan usually consists of the following steps:

  1. Compare and select a lender. Before applying, make sure to compare all available lenders and select a suitable gold loan product for your needs.
  2. Apply for a new loan. Most lenders in India offer both online or offline channels application channels. To apply online, simply visit the lender’s website and select the gold loan product (some lenders offer a variety of gold loan options, each with different borrowing terms and tenure). Next, click on the ‘Apply now’ button and complete the online application form. Alternatively, head to the lender’s nearest branch to apply in person. Make sure to bring along all required documents.
  3. Collateral appraisal. Upon receiving your loan application, the lender will follow up with you to further advise on the evaluation of your gold jewellery. Depending on the lender, the appraisal for your gold jewellery may either be done at a physical branch or your home. This process usually takes less than 30 minutes.
  4. Wait for approval. Once the lender has completed their appraisal for your gold jewellery, you’ll be offered a loan amount.
  5. Loan disbursal. If you’re agreeable with the amount and terms, the approved credit will be transferred to your bank account. Loan disbursal may take as fast as a few hours, or up to a few business days.
  6. Gold delivered to a secure storage facility. Your gold ornaments will be stored in a secure vault until you redeem the loan.
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    Indian gold jewellery

    Gold loan features

    There are a number of advantages to availing of a gold loan:

    • No restrictions on loan usage. You may use the money from gold loans for any purpose, be it to pay for a wedding, home renovation, or day-to-day expenses.
    • Minimal documentation. You’ll only be required to provide your ID and proof of residential address. Unlike other loan types, there’ll be no need for documentation such as income certificates, bank statements and tax returns (ITR).
    • Does not require a good credit score. Gold loans are generally available to those with poor credit score since collateral is required.
    • Fast approval and cash disbursement. As lenders move towards a digital application and evaluation process, borrowers may receive their funds in as little as 30 minutes after approval.
    • High Loan to Value (LTV). Banks can lend up to 75% of the gold value. For NBFCs, you may access as high as 90% of your asset value.
    • Flexible repayment. Lenders normally offer various repayment options for gold loans instead of fixed monthly instalments. Borrowers may also redeem the loan early without having to pay a penalty.
    • Lower interest rates. Gold loans typically offer lower interest rates than most unsecured personal loans.
    • Low or no fees. Most lenders don’t charge any processing or loan disbursement fees.
    • Easy loan estimation. Most lenders have a gold loan calculator on their website which can provide you with a fair idea of a gold loan per gram.
    • Safe storage. Lenders are required to store all gold ornaments taken as collateral in branches with an appropriate level of physical infrastructure and security measures stipulated by the Reserve Bank of India. Some non-bank financial companies (NFBC) also store the pledged gold in the vaults of their partner banks.

    Gold loans vs personal loans

    Gold loans and personal loans are two popular financing options for those who need cash at a short notice. Both loan types offer similar benefits, including quick cash disbursal and no restriction on end usage. And since both are ideal for those requiring fast credit access, which borrowing option should you go for?

    Here’s an overview of gold and personal loans to help you understand how these two loan types fare against the other:

    Gold loanPersonal loan
    DefinitionA secured loan taken against a certain amount of goldA loan taken by an individual with the help of a guarantor, or granted based on earning capacity and creditworthiness
    CollateralGoldNot required
    TenureFlexible loan term, usually range from 1 day to three yearsFixed loan term, usually range from 1 to 5 years
    Loan amountBetween 60% to 75% of the asset valueDepends on the borrower’s creditworthiness
    Interest rateTypically 12% to 24%Typically 16% to 22%
    Processing feesLow to zero fees0.5% to 1% of the loan amount
    Credit checkNo. Credit score does not impact the loan amountYes. Credit score impacts loan terms, interest rates and approved loan amount
    Required documentationBasic identity documents such as ID and proof of residential addressIdentity and income documents, such as payslips, bank statements and income tax returns (ITR)
    Repayment optionsNo mandatory EMI repayments. You may pay the interest for loan tenure first, and repay the principal amount when you wish to retrieve your collateral and close the loan.Repayment to be made in equated monthly instalments (EMIs)

    Ultimately, the choice between gold loans and personal loans will depend primarily on your current financial situation, profile and needs:

    • Gold loans. A secured loan option suited for those requiring short loan term (i.e. six months to one year), greater flexibility in repayment, or unable to qualify for personal loans at reasonable rates due to a poor credit profile.
    • Personal loans. An unsecured loan type that is better suited for those requiring bigger loan amounts for fulfilling long-term financial requirements (i.e. up to five years).

    What happens if you default on your gold loan?

    If you’re unable to repay your loan within the stipulated time, the bank will have the right to auction off your gold to recover the money.

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    What interest rate applies to a gold loan?

    To help you make an informed decision, here are the gold loan interest rates from some of the top banks and NBFCs in India as of 25 May 2021:

    ProviderInterest rates (p.a)Loan amountTenure
    SBI Gold Loan7.5% to 7.5%₹20,000 to ₹5,000,0003 to 36 months
    HDFC Gold Loan11% to 16%₹25,000 onwards (Rs. 10,000 for rural areas)3 to 24 months
    ICICI Gold Loan12% to 16%₹10,000 to ₹1,000,0006 to 12 months
    IIFL Gold Loan9.24% to 24%3 to 11 months
    Muthoot Finance Gold LoanFrom 12%₹1,500 onwards30 days to 12 months
    Axis Gold Loan12.50% to 17.50%₹ 25,001 to ₹ 25 lakh3 to 36 months
    Manappuram Gold Loan9.9% to 29%₹1,000 to ₹15,000,0001 day to 3 Months
    Kotak Mahindra Gold Loan10% to 17%₹20,000 to ₹15,000,00012 to 36 months

    Note: The information provided is accurate as of 25 May 2021 and is subject to change at the sole discretion of providers.

    How much is a gold loan per gram?

    The amount you can avail of a gold loan depends on the purity (typically within the range of 18 to 24 carats) and weight (per gram) of your gold articles, adjusted for the loan to value (LTV) ratio. Gold prices fluctuate on a day-by-day basis and vary between lenders.

    Not all lenders publish their daily rates online, so be sure to check directly with them for the latest rates. The final value will then be determined once the gold valuation is done by the lender’s appraiser.

    To give you an idea of how much you’d be offered for your gold ornaments, here’s the price per gram for different lenders as of 24 May 2021:

    ProviderEligible loan amount (per gram)Gold purity
    ICICI BankRs. 258518 carats
    Axis BankRs. 2,85920 carats
    IIFLRs. 3,39822 carats

    What fees and charges come with gold loans?

    These are the common fees associated with gold loans:

    • Processing fee. Loans often come with a processing fee, which typically ranges from 1% to 2% of the disbursal amount.
    • Gold appraisal charges. Some lenders charge a fee for the appraisal of your gold ornaments, which will be indicated at the time of application.
    • Closure charge. A nominal loan closure penalty ranging from Rs. 0 to Rs. 150 may be imposed if you close the loan within a short period after availing (e.g. less than 3 months).
    • Mark-to-market (MTM) charges. MTM is an accounting practice of valuing financial assets in line with their market value and not at cost. Some lenders may charge an MTM fee to protect themselves from depreciated prices of the gold collateral.

    How to apply for a gold loan in India

    With an increasing number of Indian lenders digitising their loan application process, borrowers can now get a gold loan at the comfort of their home. Before applying, make sure to have the required documents on hand. Most lenders also require the purity of your gold collateral to be between 18 to 22 carats.

    Required documents

    You’ll typically be required to submit any of the following identity documents when taking out a gold loan:

    • Valid passport
    • Valid driving license
    • Voters’ ID card
    • Aadhaar card
    • PAN card or Form 60

      Digital gold loans

      Instead of bringing your gold collateral to a physical branch, some lenders allow you to avail yourself of a digital gold loan at the comfort of your home. After receiving your online application, these lenders generally give you a callback to arrange for a loan manager to visit your address.

      Such convenience is particularly useful at a time such as this when the country is plagued with Coronavirus and other ongoing pandemics.

      Digital gold loans in India

      What do other customers say about gold loans?

      ProviderCustomer reviews
      HDFC Gold Loan
      • “Excellent service. Got a call the same day. The bank staff was also helpful. It was a smooth experience and staff was also helpful. It was a smooth experience.” —
        Rahul
      • “Good service by HDFC Bank. Only 30 minute wait time for the process.” — Kishor
      • “Excellent process. Happy with the service. Good for instant loans with hassle-free documents.” — Raghavendra
      ICICI Gold Loan
      • “I have bought the gold loan from ICICI bank 3 years before. The processing fee and interest rate are average. I had pledged my gold jewels for Rs. 93,000. Within one year I got the jewel back by paying the full amount. They have provided the loan in 3 hours.” — Prasad
      • “I had chosen the ICICI gold loan because of getting more values for grams which is very useful. Interest charges are higher. I have not face any difficulties for making the payments and I will be recommending this savings account to others.” — S Shahid
      • “The best advantage of ICICI gold loan, they have good balance transfer and also the interest rate is flexible as compared to Axis gold loan. The ICICI staff are responding well on my gold loan queries, any branch response is good and satisfactory.” — Balasubram
      Rupeek Gold Loan
      • “This is my second time taking a gold loan with Rupeek. Love their friendly customer service and easy repayment options. Definitely 5 star rating for this app!” — Md Nasir Uddin
      • “Experienced doorstep customer service for first time! Amazing it was. Very professional.” — Mohammed Mijan Khan
      • “I availed a gold loan from Rupeek with truly minimum documentation requires. It was also processed really quickly. Satisfied with its good service.” — Riya Islam

      Note: Customer testimonials based on providers’ Facebook pages and websites.

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