Slide Down or turn up: Gold Loan Approach


With the rise in gold prices along with the muted offset of other loan products, a gold loan is one of the most popular options for availing finance. These skyrocketing prices of gold are the primary reasons why people are gradually shifting to gold loan products. Since January, the gold price has been all-time high, with prices almost climbing upto Rs. 50,000 per 10 gms. These, along with other considerable factors, have increased the demand for gold loans in a way it wasn’t anticipated before.

Let’s try to understand the reasons why the gold loan market has suddenly become so active;

First thing first, the pandemic has created a serious challenge for people of all socio-economic classes. In the lockdown period, when the entire country came to a standstill, all the economic activities were also shut down entirely. This, in result, has impacted most of the sectors, the worse being hospitality, aviation, industries connected with event management and much more.

While economic activities have resumed, the impact of this lockdown can be analysed with the fact that the GDP has experienced negative growth. So how has this affected the demand for gold loans is the question that you might be wondering about.

The current scenario features massive unemployment, salary cuts, nil or limited sources of income. Thus, in such a scenario, a gold loan certainly comes handy because of a lot of reasons. One of the reasons includes that there is no requirement of proof of income to get a gold loan. So, you can easily avail hassle-free credit with minimal documents for identity and address proof.

Next, the lending institutions have also launched various schemes to attract borrowers. These gold loan schemes provide gold loans at lower gold loan interest rate to the borrowers. Along with that, the borrowers can now get more finance against the mortgage of their gold. With the change in RBI guidelines of LTV of gold loans up to 90% of the gold value, the borrowers can now get benefits they might have never availed in their life. This limit has been increased till March 2021 for non-agricultural loans, given that people are struggling to revive their business, manage their day to day operations, including their health and family. So this certainly means that the borrowers can now get more value for the idle gold lying in their households.

The online availability of gold loans at the doorstep of the borrowers is yet another feature of gold loans that is attracting a lot of borrowers. They can now fill the application for a gold loan, the representative of the bank will come to the house to evaluate your gold jewellery and documents, and the loan will be sanctioned to your bank accounts in a few hours. Thus, the faster processing with the hassle-free procedure of digital gold loans is no doubt increasing the demand for gold loans.

Further, gold loan rates are also getting cheaper with nil or negligible processing fees on gold loans.

Here are top banks that provide gold loans at lowest interest rate:


Banks Interest Rate Processing Fees
SBI 7.50% 0.50% of the loan amount, minimum Rs. 500
Canara Bank 7.65% 1% of the loan amount, Min Rs. 1,000 and Max Rs. 5,000
Federal Bank 8.50% Nil
PNB 8.75% 0.70% of loan amount + taxes
IIFL 9.24% Nil

Finally, with flexible repayment gold loan schemes such as bullet repayment, overdraft schemes on gold loans along with flexible tenure ranging from 1 day to 36 months is another positive nature of gold loans, which is usually preferred by the borrowers.

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