Gold Loans Surge 42%: Is Your Jewellery Your New EMI?

Gold loans are now India's fastest-growing retail credit. More families are pledging their jewellery for quick cash — but high interest rates and auction risk make this a double-edged option.

Here's what happened: Gold loans have grown at a CAGR of over 42% since early 2024, nearly double the pace of other retail loans like personal loans or consumer durables credit.. Both banks and NBFCs (like Muthoot, Manappuram) are aggressively expanding gold loan portfolios as collateral-backed lending feels safer amid rising defaults elsewhere.. RBI has flagged concerns about lax gold valuation practices and loan-to-value (LTV) breaches, prompting tighter scrutiny of how lenders assess your jewellery's worth..

What you should do: Compare interest rates before pledging gold — bank gold loans (8–12% p.a.) are typically cheaper than NBFC rates (18–26% p.a.) for the same jewellery.. Check the LTV ratio offered: RBI caps it at 75% of gold value — if a lender offers more, that's a red flag worth questioning.. Always ask for your gold's weight and purity certificate at the time of pledging, and set a repayment reminder — lenders can auction your jewellery after just 3 months of default..

Pro tip: Repay interest monthly even on bullet-payment gold loans. Letting interest accumulate can push your outstanding above the 75% LTV cap — triggering an early auction notice you may not see coming.