Gold loans: how much you can borrow and your rights

A gold loan is secured borrowing against ornaments you already own. You keep title, the lender keeps the gold, and you get it back on repayment. RBI rewrote the rules in 2025, and the changes mostly favour the borrower: a higher borrowing limit on small loans, a valuation method that cannot be gamed, and a daily penalty when a lender is slow returning your gold.

How much you can borrow

The loan-to-value limit is tiered by loan size, not by who you are or what the gold is:

The 85% band is the change that matters most. It used to be 75% across the board, so a small borrower can now raise roughly a seventh more against the same ornaments.

What that looks like today

At the current 22K benchmark of ₹14,059.30 a gram, ignoring deductions for stones and non-gold weight:

The cliff at ₹2.5 lakh

Because the tier is set by the loan amount, the boundary is abrupt. Borrowing exactly ₹2,50,000 at 85% needs gold worth about ₹2,94,118. Borrowing one rupee more drops you to the 80% band, which needs about ₹3,12,501, so that single extra rupee of loan requires roughly ₹18,384 more gold value behind it.

If your requirement sits near the boundary, borrowing slightly less can be materially cheaper in collateral. It is worth asking a lender to price both sides of the line.

How your gold is valued

Two rules govern this, and both protect you from an arbitrary number.

Everything is benchmarked to 22 carat. Higher or lower purity is converted to its 22 carat equivalent before valuation, so an 18K piece is not valued as though it were 22K, and a 24K coin is not undervalued as though it were.

The price is the lower of two figures: the 30 day average closing price, and the previous day’s closing price. That deliberately caps what a single day’s spike can do. If gold jumps sharply today, your borrowing limit does not jump with it, because the 30 day average lags. The reverse also holds: a one day fall does not immediately cut your collateral value either.

This is a different number from the rate on our home page, which is that day’s IBJA benchmark. Ours tells you what your gold is worth. A lender’s valuation tells you what it will lend against, and the second is deliberately the more conservative of the two.

Only gold content is valued. Stones, enamel and filler are excluded, so a heavy stone-set piece supports a smaller loan than its weight implies.

Limits on what you can pledge

Per borrower: up to 1 kg of gold ornaments and up to 50 grams of gold coins. The coin limit is the one that catches people who have been buying coins as savings.

Bullet repayment loans

Many gold loans are bullet loans: you pay nothing during the term and settle principal and interest together at the end. Two rules apply specifically to them. The tenure is capped at 12 months. And the LTV is calculated on the total amount repayable, not on what you receive.

That second rule surprises people. Because the interest is inside the LTV calculation, the cash you actually get is less than the headline percentage of your gold. The longer the term and the higher the rate, the wider that gap.

Your rights when things go wrong

• You must be present when your gold is valued. Not told a figure afterwards.
• Release within seven working days of full repayment.
• ₹5,000 per day payable to you by the lender for every day beyond that until the gold is released. This is a real entitlement and worth citing if you are being stalled.
• Auction surplus within seven working days. If your gold is auctioned after default and it fetches more than you owed, the excess is yours and must be returned on that timetable.
• Default and auction procedures must be in the loan agreement. Read that section before signing, not after a payment is missed.

Before you pledge

Work out the metal value of what you are handing over first, so a valuation can be checked rather than accepted. The gold calculator does that in a few seconds. Remember the lender will value at 22 carat equivalent and on a conservative price basis, so expect its figure to sit below the day’s benchmark rather than on it.

Get the purity assessment, net gold weight, valuation price and interest rate in writing. And be clear about the consequence of default: this is your jewellery, and an auction is not a theoretical outcome.

This is general information rather than financial advice, and we are not licensed advisers. Compare offers and read the agreement before borrowing.