Gold Loan LTV: Are You Getting Your Full ₹?

Gold loans let you borrow cash against your jewellery fast, but RBI limits how much you get, interest rates vary widely, and defaulting means losing your gold forever. Here's what to check first.

Here's what happened: RBI has set a hard loan-to-value ceiling of 75% for gold loans from banks and regulated NBFCs, limiting borrowing to ₹75,000 per ₹1 lakh of jewellery value.. Interest rates on gold loans range from around 8% at PSU banks to over 24% at some NBFCs and informal lenders, making lender choice a high-stakes decision.. Lenders can auction pledged gold without a court order if the borrower defaults, with the auction clause buried in the standard loan agreement most borrowers never read..

What you should do: Compare annualised interest rates (not just processing fees) across at least one PSU bank, one private bank, and one RBI-registered NBFC before pledging.. Ask the lender to show you the exact LTV calculation and the current appraised value of your gold in writing before signing any agreement.. Read the default and auction clause — confirm the notice period you get before auction and whether any surplus from the sale comes back to you..

Pledge only the minimum gold needed. Lenders hold all pledged jewellery as a single lot — if you default on even a small shortfall, the entire pledged quantity goes to auction, not just a proportional piece.

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