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What is the Maximum and Minimum Gold Loan Limit in India?

What is the Maximum and Minimum Gold Loan Limit in India?

What is the Maximum and Minimum Gold Loan Limit in India?

Long gone are the days when gold was only a luxury possession limited to a few economic groups. Today, it is one of the most purchased commodities and with its prices soaring high, it has now become one of the most traded as well. Indians consume gold in a variety of forms, including gold bars, jewellery, and even coins, having an aesthetic, cultural, and economic value attached to it.

Of late, there has been a spike in gold loan queries and more consumers wanting to exchange their gold ornaments with cash in emergencies. A myriad of gold financing companies provides offers to keep gold ornaments safely in exchange for loans or returns.

Minimal Documentation

Financial institutions follow a pretty straightforward KYC-based documentation. The borrower must provide all the related records, for example, identity and address proof. Unlike other loan applications, income certificates or financial statements are not required in the gold loan process.

Lower Interest Rates

Gold loans are a secured form of borrowings; thus, institutions charge a lower interest rate contrasted with other unsecured advances. The interest rates could be as low as 11.5%, while personal loan rates mostly begin at 15%.

No Processing Fee

Banks and listed financial institutions don't charge processing fee as gold loans are given in a split second in lieu of gold which is held as security with the moneylender.

CIBIL Has No Impact On Application

Unlike most advances, gold loans don't rely upon your financial condition or credit score. The majority of gold loan borrowers are in urgent need of money. The advance sum for other unsecured loans is given dependent on the repayment limit and previous repayment record of the borrower. However, in the case of a gold loan, the advance sum is given based on the estimation of gold.

Safe Custody Of Gold

The responsibility of the security of the gold ornaments lies with the moneylender. It stays protected in their vault, and the borrower need not worry over that. After the full repayment of the loan amount, the borrower gets their gold back.

Used For Various Purposes

Gold loans can be utilized to navigating financial crises such as medical emergencies, education, business expansion, wedding plans or the initial instalment for the acquisition of a vehicle or a home.

Factors Determining Gold Loan Application


The most common documents required for a gold loan application are identity proof, address proof, and recent passport-sized photos. While this list remains constant, many institutions have additional lists of documents for an added layer of protection. Contact the institution for more details on this.

Loan Amount Limitations

Gold loans are valued against the estimation of gold ornaments; thus, financial institutions have a sanctioning limit and can offer loans within that range only. Yet institutions like Shriram Finance Ltd. have a broad sanction limit, starting from ₹ 10,000 up to ₹ 20 Lakhs. Note that the higher limits are only allowed in special cases where management agrees with the circumstances, and the borrower has a positive repayment record.

Gold Valuation

In the case of a gold loan, the financial institutions can sanction a credit limit of up to 75% of the market value of the gold mortgaged. The loan to value ratio, in this case, is capped by the Reserve Bank of India. The customer can then withdraw this amount at any point in time. In cases where the borrower has fully repaid the loan amount, their gold loan eligibility criteria to reclaim the same gold for their future needs is positive.

Facts about Gold Loan Application


There is no restriction on the number of times a gold ornament or any other form of gold can be mortgaged. This assists borrowers with taking credits over and over on a single piece of gold. This benefit is exclusive to gold loans compared to other personal or business loans, where advances are dispensed depending on the borrower's ability to repay the loan. Additionally, a borrower may or may not be able to get a personal loan from the same institution, depending upon their repayment history and multiple other factors, which is not the case for a gold loan.

Flexible Repayment options in Gold Loan

The greatest benefit of a gold loan is the adaptability to reimburse the principal amount and interest in various forms such as a lump sum amount or equally distributed monthly gold loan payment options, an option that is not available in any other loan advances. This component helps entrepreneurs and small business owners, who occasionally face money crunch, to favour gold advances over other business loan choices where monthly EMIs can be burdensome. Again, individual NBFCs have their own loan gold loan payment options, and borrowers must understand the terms & conditions before applying.

Mistakes To Avoid While Applying For A Gold Loan

Not Weighing The Credibility Of Lender

At the point when you take a gold loan, you promise your gold to a money lending institution for a sum dependent on its valuation. As a resource upheld against the advance, your gold remains in the hands of NBFCs until complete repayment. Check the credibility of the moneylender and survey on the internet about the recent experiences of their customers. You can visit their website to analyze them based on the interest rate, repayment options in gold loan tenure and prepayment or foreclosure charges.

Not Understanding The Value Of Your Gold

Gold loan providers give advances on gold ornaments having 22 carat purity or more. Further, gold bars or gold coins over 50 gms are not acknowledged as insurance by NBFCs and other financial institutions. Likewise, if the ornaments have gemstones on them, the total calculation does not count the value of gemstones. Accordingly, it is critical to know your gold, purity, and market valuation before applying for a credit against it.

Not evaluating lenders

There are different moneylenders in the market ready to give you a gold loan with multiple benefits and offers. While looking at your choices, it is important to take into account all the factors prior to making the decision. Almost every institution has an appealing gold credit proposition; make sure to read the fine print before making your decision. As a borrower, you must research and compare the institutions based on their interest rates, Loan to Value proportion (LTV), gold loan tenure, and ranking. You would then be able to settle on the most suitable institution as well as an offer appropriate for your need.

Shriram Finance offers the best interest rates in the market, and their gold valuation is genuine as well. Borrowers pay no hidden fees other than the one they mutually decide with the institution to be paid in the form of EMIs. Shriram Finance Gold Loan is a compelling option for those in need.

Get a gold loan at low interest rates