Apart from personal loans, Indian banks and financial institutions provide different types of financing options with relatively lower interest rates that can suit your feasibility. One major form is gold loans, involving pledging or using collateral to finance personal expenses like weddings, education, or business ventures.
In this article, we will walk you through a comprehensive guide on gold loans while highlighting the applicable gold loan interest rates of different banks.
Generally, gold loan interest rates in India vary from 8% to 26% per annum. The total interest and the principal are calculated based on this rate. Borrowers have the flexibility to repay the interest over their chosen loan tenure, either through small instalments or as a lump sum.
The eligibility criteria set for a gold loan can vary from one lender to another. Therefore, it is advisable to check such criteria outlined on the lender's website before initiating the application for a gold loan.
Here are some eligibility criteria commonly set by most lenders in India for gold loans:
The list of documents required at the time of applying for a gold loan varies, depending upon the lender’s terms and conditions. Take a look at the following documents that are generally needed for a gold loan:
Take a look at the following table to find out the applicable processing fees and loan appraiser charges of different leading banks in India:
Name of the Bank | Processing Fee & Appraiser Charges |
SBI Gold Loan | Rs. 200 + GST in case of 3 months Bullet Repayment Gold Loan |
Rs. 300 + GST in case of 6 months Bullet Repayment Gold Loan | |
0.50% of loan amount subject to minimum Rs. 500 and maximum Rs. 10,000 + GST in case of 12 months Bullet Repayment Gold Loan | |
0.50% of loan amount subject to minimum Rs. 500 + applicable GST in case of EMI-based Gold Loan | |
HDFC Gold Loan | Up to 1% of disbursal amount (inclusive of applicable tax) |
Axis Gold Loan | Rs. 300/Case in case of fresh loan up to Rs. 3 lakh |
0.5% of the loan amount in case of a renewed loan of more than Rs. 2 lakhs | |
Canara Gold Loan | 0.50% of the loan amount with a minimum of Rs.500 and a maximum of Rs.5,000 in the case of the Swarna Overdraft gold loan |
Rs. 2,750 in case of MSME and Agricultural Gold Loan Schemes amounting to more than Rs. 10 lakh | |
BOB Gold Loan | NIL up to Rs. 3 lakhs |
Applicable as per bank’s terms and conditions along with GST in case of loan amount above Rs. 3 lakh up to Rs. 50 lakhs | |
Karnataka Bank Gold Loan | No limit specified |
PNB Gold Loan | 0.30% of loan amount + GST or Rs. 500 + applicable tax, whichever is higher |
Kotak Gold Loan | Up to 2% of loan amount + applicable GST |
Federal Gold Loan | Up to 3% of loan amount + applicable GST |
Central Bank of India | 0.50% of the loan amount, subject to a minimum of Rs. 250 and a maximum of Rs. 5,000 |
Indian Bank Gold Loan | NIL |
IDBI Bank Gold Loan | 1% |
IndusInd Bank Gold Loan | 1% of the loan amount + GST |
Here are some of the factors that influence the interest rates for gold loans offered by prominent banks and financial institutions in India.
While processing a gold loan request, the lender takes into account the applicant's monthly income. When you earn a stable income, the bank or financial institution becomes more assured of your capacity to repay the loan. This subsequently leads to a lower interest rate charged against your gold loan.
As per the Reserve Bank of India, the Loan to Value (LTV) ratio for gold loans is 75%. This ratio denotes the maximum loan amount that banks can provide based on the value of the pledged gold. If the current gold market rate is high, the value of the articles you pledge against your gold loan will also be high. In this case, lenders offer lower interest rates since less risk will be involved.
The amount of loan you request from a lender determines the rate of interest against which your gold loan will be charged. You will be liable to pay higher interest if you want to avail a higher loan amount. Therefore, all borrowers need to assess their loan requirements before applying for a gold loan.
All gold loans facilitated by Indian banks are linked with an external benchmark, be it the RBI repo rate or the 10-year government bond rate. The interest rates on gold loans are subject to change when the Reserve Bank of India or the Government of India adjusts its policy rates. If there is an increase in the policy rates, the gold interest rate will also increase.
As an eligibility criterion, a lender in India considers your creditworthiness, defined by the CIBIL score, while sanctioning a gold loan. A borrower with a good credit score is more likely to qualify for lower interest rates. A good credit score, representing a good repayment history, assures a lender that you will repay the loan amount without any hassle.
Here is a table highlighting the rate of interest charged against the gold loan provided by top banks in India, along with the loan amount and tenure:
Name of the Bank | Interest Rate | Loan Tenure |
SBI Gold Loan | 8.70% p.a. | Up to 36 months |
HDFC Gold Loan | 11% p.a. to 16% p.a. | 3 months to 24 months |
Axis Gold Loan | 17% p.a. onwards | 6 months to 36 months |
Canara Gold Loan | 9.60% p.a. | 12 months - 24 months |
BOB Gold Loan | 9.15% p.a. onwards | 12 months to 36 months |
Karnataka Bank Gold Loan | 9.33% p.a. and 11.30% p.a. | 6 months to 12 months |
PNB Gold Loan | Up to 9.25% p.a. | As per the lender's terms and conditions |
Kotak Gold Loan | 8% p.a. to 24% p.a. | Up to 4 years |
Federal Gold Loan | 8.99% p.a. onwards | As per the lender's terms and conditions |
Central Bank of India | 8.45% p.a. to 8.55% p.a | Up to 12 months |
Indian Bank Gold Loan | 8.65% p.a. to 10.40% p.a. | Up to 12 months |
IDBI Bank Gold Loan | At the discretion of the bank | 3 months – 36 months |
IndusInd Bank Gold Loan | 9.60% - 16.00% | Up to 12 months |
Given below is a comparative outline of varying gold loan interest rates provided by different financial institutions in India other than leading banks:
Name of the Lender | Interest Rate | Tenure |
Bajaj Finserv | 12.99% onwards | 1 month -36 months |
CASHe | 33% to 36% | As per the lender's terms and conditions |
Indiabulls | 13.99% onwards | As per the lender's terms and conditions |
Muthoot Finance | 12%-27% | 7 days to 36 months |
TATA Capital | 10.99% onwards | As per the lender's terms and conditions |
IIFL | 9.24%-24% | 3 months-11 months |
Manappuram Finance | 14%-29% | 3 months |
The best bank for a gold loan varies for different individuals, depending on their financial requirements and preferences. Take a look at the following table to find out why the gold loan interest rate offered by some leading Indian banks is considered the best:
Banks | Particulars |
Central Bank of India | Best for offering the lowest gold interest rate in India |
Axis Bank | Ideal for borrowers who are seeking a fixed interest rate against their gold loan |
State Bank of India | Known for offering bullet repayment options of 3 and 6 months |
Tamilnad Mercantile Bank | Best suited for individuals looking for short-term loans, with the loan amount starting from Rs. 3,000 |
Punjab National Bank | Renowned for providing the best financing options against both sovereign gold bonds (SGBs) and other forms of gold assets including jewellery and coins |
Indian Overseas Bank | Ideal for women borrowers, seeking for insurance add-on under the PMSBY scheme |
Bank of Baroda | Offers best loan interest rate against 18-carat purity gold |
A gold loan calculator is a financial tool readily accessible online that computes the approximate value of the loan amount you can avail. It can also determine the amount of interest you will be liable to pay against a gold loan, along with the monthly EMI amount. This tool proves to be valuable for borrowers planning to apply for a gold loan, offering them an estimate of their repayment liability.
The interest amount payable on a gold loan, as determined by the interest rate, can also be calculated using a mathematical formula. Let us now discuss this formula with the help of an example.
P x R x (1+R)^N / [(1+R)^N-1]
In this case, P = Principal loan amount, N = Tenure of the gold loan in months and R = Applicable rate of interest.
Suppose you want to avail a gold loan of Rs. 1 lakh from a leading bank in India, charging 7.2% interest for 3 years.
By incorporating the values into the formula, you will find that
The amount payable = 1,00,000 * 0.006 * (1 + 0.006)36 / ((1 + 0.006)36 – 1) = Rs. 1,11,487
Here is a detailed overview of the maximum and minimum limit of loan amounts you can sanction from the leading Indian banks and financial institutions:
Bank/Financial Institution | Minimum Amount | Maximum Amount |
HDFC Bank | Rs.10,000 | Rs.5 crore |
ICICI Bank | Rs.10,000 | Rs.5 crore |
SBI Bank | Rs.20,000 | Rs.50 lakh |
Yes Bank | Rs.10,000 | Rs.5 crore |
Canara Bank | Rs.5,000 | Rs. 50 lakh |
Axis Bank | Rs.10,000 | Rs.5 crore |
Bank of Baroda | No limit specified | Rs.50 lakh |
Karnataka Bank | No limit specified | Rs.25 lakh |
Punjab National Bank | Rs.25,000 | Rs.25 lakh |
Kotak Bank | Rs.20,000 | Rs.1.5 crore |
Federal Bank | Rs.1,000 | Rs.1.5 crore |
Central Bank of India | Rs.10,000 | Rs.40 lakh |
Indian Bank | Rs.25,000 | Rs.10 lakh |
IDBI Bank | Rs.10,000 | Rs.50 lakh |
IndusInd Bank | No limit specified | Rs.20 Lakh |
Bajaj Finserv | No limit specified | Rs.25 lakh |
Indiabulls | Rs.1,000 | Rs.15 lakh |
Muthoot Finance | Rs.1,500 | No maximum limit (Varies from plan to plan) |
TATA Capital | Rs.75,000 | Rs.25 lakh |
IIFL | No limit specified | Up to 75% of the market value of your gold |
Manappuram Finance | Rs.1,000 | Rs.1.5 crore |
CASHe | Rs.9,000 | Rs.3 lakh |
You can easily apply for a gold loan, either through online or offline mode. However, before proceeding with the application process, it is in your best interest to seek out lenders offering low-interest rates and flexible terms and conditions. Moreover, you must also check the eligibility criteria and documentation requirements before applying.
Following this, you can move forward with the application process as outlined below:
The following is a step-by-step guide on how to apply for a gold loan online.
Step 1: Visit the official website of your desired lender.
Step 2: Navigate to the ‘Gold Loan’ section under ‘Loan Products’.
Step 3: Look for the ‘Apply Now’ tab on the ‘Gold Loan’ page and click on it. You will be redirected to a new page displaying an application form.
Step 4: Fill it up carefully with all the required details.
Step 5: Click on the ‘Submit’ tab after verifying.
In case your lender does not provide an online application facility, you will have to apply for a gold loan through the offline mode. Here is a stepwise process you need to follow with due diligence for doing so.
Step 1: Visit the nearest branch of your preferred lender, along with the required documents.
Step 2: Consult with a branch representative and obtain a gold loan application form.
Step 3: Fill up the form with accurate details and attach the supporting documents with it.
Step 4: Submit it to the branch representative.
Once you go through the above-mentioned steps, your gold loan application request will be processed. Upon successful processing and verification, you will be sanctioned a gold loan.
There are 4 ways of closing a gold loan. Let us discuss these methods in detail.
Under this method, borrowers are allowed to pay the amount of interest in small instalments or EMIs throughout the loan tenure. On the other hand, the principal loan amount is payable at the end of the tenure in a single lump sum payment.
This method involves repayment of both the principal loan amount and the amount of interest as EMIs throughout the tenure every month. It is an ideal way of repayment for salaried borrowers or individuals with a fixed monthly income.
In this method, an individual is required to pay the entire principal amount along with interest in one lump sum at the end of the loan tenure instead of making small periodic payments. This method offers borrowers flexibility, especially those whose income varies throughout the year.
The partial payment method allows individuals to close their gold loan before the tenure by paying off the entire loan amount along with the interest. By doing so, you can significantly save on your interest payments. It is suitable for those financially secure individuals to repay their loan ahead of schedule and claim back the pledged gold articles.
Although an attractive funding option, it is advisable for all borrowers to check for the lowest gold loan interest rate and flexible terms and conditions while considering loans against their gold articles. Moreover, it is equally important to consider one’s financial standing to repay the loan before prioritising an option.
Other Banks Gold Loan Interest Rates:
1. ICICI Bank Gold Loan Interest Rate
2. HDFC Gold Loan Interest Rate
3. Bank of Baroda (BOB) Gold Loan Interest Rate
4. Canara Bank Gold Loan Interest Rate
5. SBI Gold Loan Interest Rate
6. Axis Bank Gold Loan Interest Rate
7. Central Bank Gold Loan Interest Rate
8. PNB Gold Loan Interest Rate
9. Union Bank Gold Loan Interest Rate
10. Indian Overseas Bank (IOB) Gold Loan Interest Rate
Indian banks offer various financing options besides personal loans including gold loans. Interest rates vary and depend on factors like income, gold market rate, principal loan amount, and credit score. Eligibility criteria for gold loans are typical, and documents needed may vary. Different banks have varying processing fees and appraisal charges. Different banks offer different interest rates for gold loans; online and offline application processes are available, and borrowers can close gold loans through different methods.