Gold loans are secured loans where gold articles such as gold jewellery, ornaments etc. are taken as collateral by the lending bank/NBFC. You can avail loan against gold easily and with minimal documentation. Apart from banks such as SBI, ICICI Bank, HDFC Bank etc., non-banking finance companies (NBFCs) also offer gold loans to individuals. NBFCs that offer gold loans include Muthoot Finance, Manappuram Finance etc.
The loan amount that you can get against a gold article will vary on the basis of purity of gold in your jewellery, LTV Ratio and other internal policies of the lender. Moreover, the lender may have a preset minimum and maximum limit. For example, ICICI Bank offers gold loans between Rs 10,000 and Rs.1 crore, whereas SBI offers gold loans between Rs.20,000 and Rs.20 lakh, while Muthoot Finance offers gold loans starting from a minimum amount of Rs 1,500 with no maximum limit.
As both banks and NBFCs offer gold loans, a comparison of rates, eligibility rules and loan amounts offered by them will help you choose the right one.