Gold loan: Low-cost option and credit score no bar, say experts

If the price of gold plunges, a borrower can be asked to put up additional collateral

Gold loan is currently the fastest-growing loan category (among the various types disbursed to individuals). On February 26, 2021, the outstanding loan against gold jewellery stood at Rs 56,596 crore. By February 25, 2022, it had risen to Rs 71,408 crore, a year-on-year growth of 26.2 per cent, according to the Reserve Bank of India’s (RBI’s) data.

Several factors are driving the demand for gold loans. “It is driven largely by the desire to spend on weddings and festivals. It is also treated as an emergency loan facility,” says YS Chakravarti, managing director and chief executive officer, Shriram City Union Finance.

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