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Gold Loan/Swarna Loan

Gold loan is a type of secured loan that can be availed by pledging gold articles such as ornaments, coins etc. This type of works as collateral and features quick disbursement. Given the fast procedure, flexible repayment and minimal formalities it demands, gold loan has been elevated as one of the most promoted loans in India. To know everything about the loan against gold and how it works, read on.

These secured gold loans, where the jewelry of the customer is deposited as security for guarantee. In this procedure you are going to give your gold jewelry to the lender from where you are getting the loan. When you complete the repayment of the loan again you will get back your Gold which you have kept for collateral at the bank. You can take this gold loan from private banks, nationalized banks and also many other financial institutes also provide you these gold loans with the best interest rates.

It is always suggested to go for a gold loan than for a personal loan. Compared to the personal loan, taking a gold loan is the better option depending on the observations. In taking this gold loan you will get the value of the gold up to 60%. With the tenure of five year you have to apply for the gold loan in which interest rate charges will be 9.90 percent per annum.

Features and Benefits of Gold Loan

Here are the features and benefits of gold loan that you can count on:

1. Gold Loan Amount 

The minimum amount of loan you can avail against your gold articles ranges between Rs 10000 to Rs 25000. The amount totally depends on the discretion of the bank or NBFC you prefer. 

The maximum gold loan amount depends on the gold articles you pledge and the bank or NBFC you wish to avail the loan from. 

2. Loan Tenure

Loan tenure is an important factor when it comes to any type of loan. In case of loan against gold, the loan tenure ranges from 3 months to 6 months. 

The maximum line goes up to 4 years, to say generally. Then there are many banks and NBFCs that offer only up to 2 years as loan tenure. 

3. Collateral

One of the highlighted features of gold loans is that it works as a collateral. When you are availing funds in the lieu of handing over your gold to the lender, your gold articles become collateral. 

Your gold is kept by the lender until you successfully pay off the full amount of loan. In case you fail to repay the gold loan amount, your gold articles will be surrendered to the lender to cover the amount.

4. Security

Since the gold articles you deposit to avail the funds are retained by the lender, there prevails a sense of security for your gold. Unless you pay the full amount loan, the gold articles are safe with the lender. 

5. Foreclosure

Do you want to prepay the full gold loan amount before the tenure ends? If yes then you may go ahead and do that. Given that most banks and NBFC allow prepayment and do not charge any foreclosure fees, you can pay off the loan and close it without using all of the tenure. 

But here is an important note: Before you take any step, enquire about the foreclosure with the lender and confirm if there are any charges or any other terms for loan prepayment. 

6. Processing Fees 

While there are interest charges that have to be paid every month for loan against gold, you are also required to pay the processing charges along with GST. But the relief is that Swarna loans come with processing fees as low as zero. Many lenders do not even ask you to pay any processing fees for a gold loan. They waive it off in order to draw more customers. Generally, the gold loan processing fees range from 0.50% to 2% alongside the GST. 

7. No Credit History Needed

You can choose a gold loan for that matter. One of the benefits of a gold loan is that you do not need to show any credit history in order to get approval from the lender. 

Since you are already depositing the gold to the lender as a collateral, they will easily recover the loss if you fail to repay the loan. Thus, they do not rely on your credit history for that which eliminates your requirement to show your credit history. 

8. No Income Proof Needed

When it comes to a gold loan, you do not need to fret over the fact that it is always so mandatory to bring your bank statements and pay slips to prove your income to the lender. One of the important benefits of gold loans is that the lenders do not require you to show proof of income. 

9. Quick Disbursement

You can count on this benefit of a gold loan. Gold loan is considered beneficial because it comes at minimum documentation and quick disbursement. Usually, the lenders take 2 to 3 days to avail the loan which is comparatively lesser a time that other types of loan.

So, there were some  highlights on features and benefits of Swarna loans. The benefits of loan against gold also vary across different banks and NBFCs, depending on the offers and schemes. 

Gold Loan Fee and Charges

To apply for a gold loan, you have to pay fees and charges applied by the Bank. It covers all charges and fees made by a bank to their customers.The following charges are taken from the Bank is joining fee, annual fee, interest rate, late payments charges etc.



Interest Rate 

9.90% per annum

Processing fee 

Upto 25 of the loan amount

Part payment  Charges 


Foreclosure Charges 


Penal Interest

3% (inclusive of taxes)

Tenure period 

4 years 

Loan Amount

Rs.10000 to Rs.50 lakh 

Gold Loan Eligibility Criteria

You need to pass certain eligibility criteria in order to get the gold loan. The eligibility criteria which you need to meet varies depending on the lender, but here are the general requirements that have to met by an applicant:

  1. The minimum age of applicants should be 18 years.

  2. Applicants can only pledge gold articles.  

  3. The gold articles an applicant is pledging should be at least 18 carats. 

This is just the basic eligibility criteria for a gold loan that is required to be met by you. If you want to check the eligibility criteria set by a specific lender, you can simply check it on their website or contact their customer service to enquire about it.

Documents Required For Gold Loan

The documentation for loans against gold gives you no fuss. Since this part is an important key to take the application further, you need to make sure that you have all the necessary documents that are asked by your lender. 

Here are the documents required for gold loan:

Address Proof

PAN Card, Form 60, Passport, Voter’s ID Card

Identity Proof

Aadhar Card, Voter’s ID Card, Passport


Application Form, Proof of Age, Proof of Signature, Passport-size Photos

These are the documents that are generally required by any bank or NBFC in order to process the loan against gold application. You will be required to submit any other documents required specifically by your leder to proceed the gold loan application. 

You shall receive the call from the executive in regard with your loan application. For more details, you can contact your preferred lender and enquire about the loan application procedure they follow. 

Things to Consider When Taking Gold Loan

Before you visit any branch or website to begin with your swarna loan application process, there are some things you need to take into consideration which will help you understand which lender is best suited for your requirements. 

Here are some important things to consider when applying for gold loan:

1. Your Requirements

Before anything else, comes the question about what you need and how much of it do you need. If you wish to avail the loan against gold, the next question arises is how much of an amount do you wish to avail. 

The loan amount you can avail is based on the gol articles you deposit. Thus, you need to make sure you have the required gold you need to avail the desired amount. 

2. Comparison

Another important thing to consider before you apply for a gold loan is the comparison of different lenders. Along with the eligibility criteria that is required to be met, you should check the offers, charges, features and benefits you can fetch from different lenders. On this basis, you will be able to figure out the best lender to suit your needs and profile.

3. Suitable Tenure

You should consider your ability to repay the loan amount before you apply for the loan. The length of tenure is determined by your repayment capacity. The loan tenure for gold loans generally ranges between 3 months to 3-4 years. You should gauge your capacity to repay the loan in order to decide the loan tenure you would like to opt for. 

4. Repayment Options

Repayment for gold loans come with flexible options. You can either pay the principal amount and the interest at the end of loan tenure or you can pay the interest each month and pay the principal amount at the end of loan tenure.

However, do note that these options for loan repayment schedule depend on different banks and NBFCs and you should enquire about the repayment options with your lender in order to make better decisions. 

5. Applicable Charges

This one is one of the most crucial things to consider when getting a loan against gold. Before you take a final call, make sure that you enquire about different applicable charges such as processing fees, documentation charges, prepayment charges, overdue charges etc. levied by different lenders. 

These charges can give a hike to the total cost of gold loan and therefore, it is important to see which lender is availing the loan at lesser cost. 

Compare other Bank Gold Loan Interest Rates


Interest Rate

AXIS Bank Gold Loan

14.50% to 17%

HDFC Bank Gold loan

11% to 16%

Kotak Mahindra Bank Gold Loan

10.50% to 17%

Yes Bank Gold Loan

11.25% to 16.25%

ICICI Bank Gold Loan

10.00% to 19.76%

RBL Bank Gold Loan

Starting at 10.75%

IndusInd Bank Gold Loan

10.50% to 16.00%

Canara Bank Gold Loan

Starting at 13%

Punjab National Bank Gold Loan

10.05% to 11.05%

Gold Loan EMI and How to Calculate

You can calculate the gold loan interest by subtracting the principal amount from the total amount to be paid. The total amount you would pay by the end of tenure can be calculated with the help of an EMI calculator.The following formula is used to calculate EMI of Gold Loan :

E = P* r* (1+r)^n / ((1+r)^n – 1)


  • E = EMI (Equated Monthly Installment)
  • P = Principal Loan Amount
  • r = Monthly Interest Rate
  • n = Monthly Loan Tenure

How to Apply for Gold Loan

Applying for a loan against gold is as simple as any other loan application. All you have to do to make that quick is ensure you pass the eligibility criteria set by your preferred lender and availability of all the documents required to avail the loan. 

Loan against gold application can be submitted using any online or offline channel. Here is what you need to do:

  1. Offline: You can visit the nearest bank or NBFC in order to apply for the gold loan offline. You can visit the branch and fill in the loan application form. Besides that, you need to carry the required documents to proceed with the loan application.

  2. Online: If you want to apply for the loan against gold using the online channel, then you can visit the official web portal of the bank or NBFC you wish to avail the loan from. You can look for the gold loan section on the website and go to the apply option. You need to fill in all the necessary details in the application form and submit it attached with the required documents.

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FAQ On Gold Loan

1. What if I fail to repay the gold loan?

You are charged certain overdue fees when you fail to repay the gold loan amount. Besides that, you are given frequent reminders to repay the loan. If you still do not make it to the repayment, the lender gets the right to auction your gold articles to recover the loss. 

2. Do I need a guarantor for a gold loan?

You do not really need any guarantor or a co-applicant in order to avail the loan against gold. However, if the loan amount is high then the lender can just ask you to have a co-applicant. 

3. Is it safe to pledge the gold articles?

Most lenders keep your gold ornaments or any gold assets in the room with electronic surveillance technology which ensures the safety of your assets. However, you should still do your research on the most reliable lenders and choose one wisely. 

Last Updated on : 05/Mar/2021

Know More About

Gold Loans

You're eligible for a Gold Loans if you:

Are legally adult enough to handle it

Have still got it

Get a regular pay check

Make more than a basic buck

Your eligibility depends on:

Earn more than minimum income required

Maximum allowed Gold Loans is Rs. 10K to Rs. 45 lakhs

EMIs of other loans loweryour eligibility

Boost your eligibility by:

Pay off your credit card bills

Choose longer tenure loan up to 5 years

Nothing gets done without that paperwork (which we'll happily carry over to the bank for you, no sweat). Here's what you'll need:

  • 1. Photo ID and age proof
  • 2. Signed application form with photograph
  • 3. Residence proof
  • 4. Last 6 months bank statement
  • 5. Documentation for salaried applicants:
    • Last 3 months salary - slips
    • Form 16 or Income Tax Returns
  • 6. Documentation for self-employed applicants:
    • Last 3 years Income Tax Returns with computation of Income
    • Last 3 years CA Certified / Audited Balance Sheet and Profit & Loss Account

Gold Loans Interest Rates

Updated on 25 Nov 2017

Gold Loans Details
Interest Rate (Monthly reducing balance) 14.5% - 17%
Processing Fees Varies with bank
Loan Tenure 1 year to years
Pre-closure Charges Varies with bank
Guarantor Requirement Varies with bank

Gold Loans EMI Calculator

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