Why gold loans are surging in popularity

Gold loans are surging in popularity in India due to rising gold prices and economic uncertainty. The festive season, characterized by increased gold purchases, has further boosted demand. The reduction in import duty on gold announced in the Union Budget has also contributed to this trend. Gold loans, offered by banks, non-banking financial companies (NBFCs), and jewellers, allow borrowers to secure loans against their gold assets. These loans are attractive because they offer quick disbursement and higher loan amounts due to the increased value of gold. Borrowers can get up to 80-85% of the gold’s value as a loan. The process involves assessing the gold’s purity and completing necessary paperwork. The rising popularity of gold loans reflects the broader trend of using gold as a financial asset during times of economic uncertainty3.