What is the margin in a gold loan?

The margin in a gold loan is essentially the difference between the total market value of the gold you pledge and the actual loan amount that the lender disburses to you. As per the Reserve Bank of India’s guidelines (2025), lenders are permitted to offer up to 75% of the assessed value of your gold. This means the remaining 25% is kept as a margin. For example, if your gold is valued at ₹1,00,000, the maximum loan you can receive is ₹75,000, and the margin would be ₹25,000.

This margin is not just a regulatory formality—it serves a practical purpose. Gold prices can fluctuate, and he margin acts as a buffer for the lender if the market value of gold drops during the loan tenure. It helps ensure that the value of the collateral always remains higher than the outstanding loan amount, reducing the risk of loss for the lender.

The margin may be higher in certain cases like if your gold is of lower purity or if your jewellery includes stones or non-gold elements. Lenders only consider the pure gold content when calculating the loan amount, so deductions are made for anything that is not gold. Understanding this margin helps you set realistic expectations about the amount you can borrow against your gold and why you may not receive the full market value as a loan.