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Top 6 Banks Offering Cheapest Gold Loans at Attractive Interest Rates; Details Inside

Indians have an insatiable need for gold. They consider it as a friend in need who will help them during a financial crisis. In the same way, a gold loan might be useful during difficult times.

Ayushi Raina
People from all the section of the society including the farming community can avail gold loans.
People from all the section of the society including the farming community can avail gold loans.

People from all sections of society including the farming community can avail gold loans. A gold loan is a loan that is collateralized by gold. It is a secured loan in which the lending bank/NBFC takes gold items as collateral, such as gold jewellery, ornaments etc. The borrower is given a loan using this gold as collateral. 

When borrowing money from a financial institution, a gold loan can be utilized instead of a personal loan. 

Banks and NBFCs interest on gold loans


Gold Loan Interest Rate 

Processing Fee 

Bank of Maharashtra 


Rs.500 to Rs.2000 + GST 


7.00% to 7.50% 

0.50% + GST 

Punjab & Sind Bank 

7.00% to 7.50% 

Rs.500 to 10000 max 

Union Bank 

7.25% to 8.25% 


Canara Bank 


Rs.500 to Rs.5000 

Indian Bank 

7.50% to 8% 

0.56% of the limit sanctioned 

What happens if a Gold Loan is not paid? 

"In the event of a Gold Loan non-payment, the bank begins by sending email and SMS reminders to the borrower regarding EMI payment," according to the HDFC Bank website. Once a certain amount of time has passed, certain penalties or interest rates are assessed on the Gold Loan amount.

If the Gold Loan amount is not paid despite repeated reminders within the time limit specified by the bank, the bank will sell or auction the gold ornaments to reclaim the loan money." 

Minimum and maximum gold loan amount 

Depending on the lender, the amount of money a person can borrow against a gold item varies. For example, ICICI Bank provides gold loans ranging from Rs.10000 to Rs.1 crore. The State Bank of India (SBI) offers gold loans ranging from Rs.20000 to Rs.20 lakh. Muthoot Finance, on the other hand, provides gold loans beginning at Rs.1500 with no maximum limit. 

Through a regulation statement issued in August 2020, the Reserve Bank of India (RBI) increased the loan-to-value ratio from 75 percent to up to 90 percent. 

Gold loan foreclosure 

You have the option of paying the full amount owing before the loan term ends, whether you have a gold loan with an EMI repayment plan or a gold loan with a bullet payment schedule. Gold loans, on the other hand, usually have a pre-closure fee that varies depending on the bank/NBFC. 

"You can foreclose or prepay your Gold Loan," according to HDFC Bank FAQs. However, certain fees would be levied.

Foreclosure charges would be 2% + GST if the loan was closed within 6 months of applying for it. If the property is sold after 6 months, there are no foreclosure costs." 

 Tenure of a gold loan 

The tenure of the gold loan will also vary according to the lender. HDFC Bank, for example, provides gold loans with terms ranging from three to 24 months. An SBI gold loan has a maximum payback period of 36 months. Muthoot Finance provides a number of gold loan programs with various repayment terms. 

What are the charges? 

In addition to processing fees, a gold loan application may be required to pay for the valuation of gold that will be used as collateral by the lending institution. For example, HDFC Bank charges Rs.250 as valuation expenses for loans up to Rs.1.5 lakh and Rs.500 for loans over Rs.1.5 lakh. 

In addition to processing and valuation fees, a bank may charge fees. As a result, before taking out a loan, you should confirm all fees and charges with the bank or NBFC. 

Documents required for gold loan 

To obtain a gold loan, you must present a variety of documents to the bank or NBFC. Your photo ID (PAN, Aadhaar, etc.) and proof of address (Aadhaar, passport, Voter-ID card, etc.) are generally required. Any additional documentation that may be required varies by lender.

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