As the gold prices continue to hover at Rs 1,50,000 to Rs 1,60,000 level, it brings an opportunity for the households to look at their jewellery not just as a store of value but as a “practical financial resource”.
Once seen as a last-resort option during emergencies, the loans against gold are now emerging as a smarter way to raise quick cash without selling family assets.
The surge in the gold prices allow the borrowers to access higher loan amounts at relatively lower interest rates, prompting many to tap into idle gold for planned expenses, business needs, or short-term liquidity.
As per the old days trends, the gold loans were dominated by borrowings below Rs 2.5 lakh, and these borrowers accounted for 60% of gold loans.
According to credit bureau CRIF, in FY25 their share dipped to 51%, and for the first eight months of this fiscal only 40% of loans are for below Rs 2.5 lakh.
How rising prices can help in better loan value for gold?
When you take a gold loan, the amount you can borrow is linked to the prevailing market value of your gold. As prices rise, the same jewellery pledged earlier gains higher value, allowing borrowers to access larger loan amounts or secure better terms on new or existing loans.
Higher Loan Amounts: With gold rates climbing, lenders can sanction bigger loans against the same quantity of gold.
Enhanced Loan-to-Value (LTV): A rise in gold prices improves the effective borrowing capacity, helping maximise access to funds.
Greater Liquidity: Borrowers can unlock more cash without pledging additional gold, offering added financial flexibility.
Stronger Collateral: As gold value increases, the underlying security improves, making borrowing relatively safer and more stable.
In essence, an uptrend in gold prices allows borrowers to extract more value from their existing assets without parting with ownership.
“While the craze of wearing jewellery has gone down, the desire to own gold has not. Gold loans enable owners to get loans at single-digit interest rates,” said Shripad Jadhav, head of Bharat Banking at Kotak Bank, as reported by TOI.
Jadhav said the gold loans are set to overtake loans against property to become the second-biggest loan category after home loans.
“Whether it is process, documentation requirement, or time taken, the requirements for gold loans are a fifth of what they are for loans against property,” said Jadhav.
He added that gold loans are no longer emergency loans and that 40% of borrowers are owners of MSMEs seeking to raise cheap loans for business.
As per latest RBI data, the credit extended against loans on gold jewellery increased nearly 127.6 per cent year-on-year (Y-o-Y) in December 2025 to Rs 3.82 trillion.
In December 2024, the loan witnessed 84.6 per cent Y-o-Y growth in December 2024 to Rs 1.68 trillion, largely due to the surge in gold prices.
Gold Prices Up? Your Jewellery Could Help You Raise Cash Smartly Through Gold Loan
