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Gold Loan in India

Updated on March 18, 2012

Us e of Gold for Jewellery and other gold ornamental articles dates back thousands of years back. Since then phenomenon has grown tremendously. In fact India is one of the largest consumers of Gold jewellery where it consumed more than 700 tonnes in 2010.

In such scenario a new business opportunity struck amongst the people of India especially South India where they started providing loan against gold. If you require cash for any purpose, and you have gold jewellery in hand, you can borrow money from certain institutions against your jewellery and it can be taken back once you repay your loan. This loan structure was accepted by South Indian market with an open heart. Every family had gold jewellery and the procedure to get the gold loan was relatively simple and can be finished in a day. Such schemes were available for last 70-90 years, but the popularity increased once the prices of gold start to climb upward due to various socio-economic conditions of the world.

The Gold Loans comes with few attractive schemes: -

Quick processing of your loan requirement – Few institutions do it in a day and some as less as 3 min.

Simplified Paper works: - Documents related to Gold Loan is less and easy to fill compared to other loans.

Great Payment Options: - This can be flexible and each financial institution have their special schemes.

Safety : - This is a big factor considering keeping Gold at Home or Bank Locker poses a risk to theft and yields nothing when in locker. If there is no immediate requirement of Gold jewellery, this can be used against loan.

Lower Interest Rates: The interest rates can vary from 12% to 18%, which is much more attractive than a Personal Loan or Business Loan.

During the last decade, such gold loans grew by more than 40% while the stocks of Gold grew only by 20%. This tread got boosted when salaried middle class group opted for Gold Loan and contributed more than 70% of the target customer. This made banking sector to look seriously into the “Gold Loan” options and as a trial run started it in all their branches in South India which was widened to North India as well once the popularity grew. The advantage with such banks is that the interest rate is relatively low with them and some of them can even be 5-7% less than the institutions specialized in providing Gold Loan.

The recently announced India Budget- 2012 has proposed increase in Gold import duty from 2% to 4%, which will further increase the prices of Gold Jewellery by 7-10%. Though a Bad news, but this may not have a great impact on the Gold Loan market as consumption of Gold is here to increase only.

At the same time, there are lots of malpractices prevalent in Gold Loan Schemes. Be aware of all such things and look for the credibility of the lending institutions before you opt for one. A Wise decision can be really beneficial added with lucrative offers of Gold Loan.


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    • monicamelendez profile image


      6 years ago from Salt Lake City

      In this situation do you leave your gold with the lender then?

    • profile image

      Jay Wilson 

      6 years ago

      I Like the way you have explained things about Gold Loan, but you can get more information at


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