Archive · 16 Jan 2026
Gold Loans Surge, but Risks Loom
Gold loans in India have increased a lot, by 125%, in the past year.
This is because the price of gold has gone up, so people can borrow more money using their gold as security.
However, there are risks.
If the price of gold goes down a lot, borrowers might have to pay more money or give more gold to keep their loans.
The Reserve Bank of India has warned lenders to be careful.
Experts say borrowers should not take the maximum loan amount and should have a plan to pay back the loan, just in case gold prices fall.
It's important to understand the rules and choose the right way to pay back the loan to avoid problems.
Gold loans in India surged 125% as of November-end from a year earlier, according to RBI data.
RBI has advised lenders to exercise caution due to rising volatility in gold prices.
Loan eligibility increases as gold prices rise, with lenders allowed to lend up to 75% of the pledged gold's value.
Higher gold prices increase collateral value but also raise risks during price corrections, especially for loans taken at higher LTV ratios.
Borrowers should avoid taking the maximum loan amount and have a clear repayment plan to avoid debt traps and margin calls.
- Who
- Borrowers and lenders in the gold loan segment
- What
- Surge in gold loans and associated risks
- When
- As of November-end, with a 125% increase from a year earlier
- Where
- India, as per Reserve Bank of India data
- Why
- Rising gold prices have led to increased loan eligibility and borrowing, but also higher risks during price corrections
- Loan Growth
- 125% increase in gold loans as of November-end from a year earlier
- Loan-to-Value (LTV) Limit
- 75% of the pledged gold's value
- Margin Call Trigger
- When gold prices fall by 15-20% or more
- Recommended Borrowing Limit
- Less than 80% of the permitted amount
- Repayment Options
- EMI-based or bullet repayments
- Grace Period for Auction
- Typically 15 days after account turns overdue