Can gold loan become NPA?

Yes, a gold loan can become a Non-Performing Asset (NPA) if you do not repay the outstanding dues within the agreed period. According to current regulatory guidelines in India, if the interest or principal on your gold loan remains unpaid for more than 90 days from the due date, the loan is classified as an NPA. This means the account is considered overdue and the lender will start taking steps to recover their money.

Once your gold loan is marked as an NPA, the lender will send you formal notices and reminders, urging you to clear the dues. If you still do not repay, the lender is legally permitted to auction the gold you pledged as collateral. The proceeds from this auction are used to recover the outstanding loan amount including any unpaid interest and charges. If the auction fetches more than what you owe, the surplus is returned to you or your legal heirs. On the other hand, if the sale does not cover the full dues, the lender may pursue further recovery actions.

It’s important to understand that having your gold loan classified as an NPA can also negatively affect the credit score which can make it harder to get loans in the future. To avoid such situations, always try to make timely repayments or communicate with your lender if you are facing financial difficulties.