Gold loan rates range from 8.5% to 23% with rising prices boost borrowing

Gold loan interest rates in India currently show a wide variation across lenders, ranging roughly from 8.5% to 11.88%, reflecting differences in risk assessment, loan structure, and lender category. Even though gold loans are secured products, pricing varies depending on the borrower’s profile, loan tenure, and the loan-to-value (LTV) ratio offered by banks and non-banking finance companies (NBFCs).

Data shared by Bankbazaar shows that most gold loan rates are concentrated in the 8.7% to 9.5% range, which can be considered the standard lending band for low-risk borrowers. Loans in this range are typically offered by banks or large NBFCs with strong liquidity and conservative lending practices. These products generally come with moderate LTV ratios and regular repayment schedules, making them the most common options available in the market.

Rates in the 9% to 9.75% band appear most frequently, suggesting that this range represents the typical pricing for secured lending against gold. Borrowers opting for standard tenure loans with balanced risk parameters usually fall within this bracket. Lenders pricing loans in this range aim to remain competitive while maintaining sufficient risk protection.

However, the data also shows that some lenders charge above 10%, with the highest rates going close to 23% in certain cases. Such higher rates are usually associated with NBFCs, smaller lenders, or loan products carrying higher risk. These may include loans with higher LTV ratios, shorter repayment periods, or borrowers with weaker credit profiles. In these cases, lenders charge higher interest to offset the additional risk.

Interest rates above 11% are often linked to specialised gold loan schemes, such as short-term emergency loans or products allowing higher borrowing limits against pledged jewellery. Higher LTV loans increase the lender’s exposure, especially when gold prices are volatile, leading to higher pricing.

Gold loan disbursements

The variation in interest rates comes at a time when demand for gold loans has surged sharply. According to the latest Equifax Retail Insights report, gold loan disbursements rose 94% year-on-year to ₹8.16 lakh crore in the December quarter of FY26, compared with ₹4.23 lakh crore in the same quarter last year. The rise reflects strong demand for gold-backed borrowing as gold prices increased and credit conditions tightened in other loan segments.

NBFCs recorded the fastest growth, with disbursements nearly tripling to ₹2.50 lakh crore during the quarter. Public sector banks remained the largest lenders, with disbursements rising 71.2% to ₹3.75 lakh crore, while private banks saw lending grow 65.8% to ₹1.21 lakh crore. State-owned banks accounted for about 46% of total gold loan disbursements, maintaining their dominance in the segment.

Equifax said the surge in gold loans coincided with a sharp rise in gold prices, which have grown at around 25% annually over the past three years, increasing borrowing capacity against pledged jewellery. However, the report cautioned that reliance on gold loans alone may not sustain long-term growth, as expansion depends on the availability and value of the underlying asset.