Compare the Best 8 Indian Banks Gold Loan Low-Interest Rates

Best Gold Loans from Top Indian Banks with Low-Interest 2024

A gold loan involves securing the loan by pledging your gold jewellery as collateral. It is a financial agreement where you give your gold to the bank, and in return, they give you a certain amount of money. Gold loans are easily accessible because they don't need a lot of paperwork. The gold loan interest rates are deemed reasonable, and you can choose the repayment tenure you want to take to repay the gold loan.

Key Highlights

  • Interest rates on gold loans obtained by using gold as collateral are comparatively lower than other types of loans.

  • The interest rate on gold loans ranges from 8% to 26% per annum.

  • Various banks and financial institutions all over India provide gold loans with amounts varying from INR 1500 to INR 1.5 crore.

  • The repayment period of a gold loan typically extends from 3 months to 4 years and sometimes even more.

Gold is the most favoured asset for individuals who require money and want to fulfill their financial objectives. In India, gold loans are one of the most popular types of loan, and therefore, not only the public and private banks but regional rural banks also provide the opportunity to all individuals, entrepreneurs, and small businesses to take up to 75% of the value of their gold ornaments and jewellery. These loans can be costly but have lower interest rates than all other types of loans because the gold acts as a security. Hence, the interest rate is crucial as it affects the ability of borrowers to redeem their pledged gold. If you want to secure a loan against your gold jewellery, look at the answers below to determine which bank is best for gold.

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Which Is the Best Bank for an Easy Gold Loan?

1- The Central Bank of India

According to a Forbes advisor, The Central Bank of India is the best bank to lend gold loans in January 2024. It offers the lowest interest rate of 8.45% for loans up to INR 3 lakh to Indian households. The interest rate increases slightly to 8.5% for loans up to INR 40 lakh. If you want gold loans for your businesses, the interest rate varies from 8.65% to 9.15%, which applies to loans up to INR 20 lakh.

The Central Bank of India provides a cent gold loan to individuals and businesses who pledge their gold jewellery and coins with a purity beyond 22 carats. However, loans granted for personal use against gold with 24-carat purity are subject to a weight limit of 50 grams.

2- State Bank of India

The State Bank of India provides personal loans to individuals 18 years and older. The borrower also gets the flexibility to choose the repayment option through bullet payments at 3- or 6-month intervals. SBI is known for its competitive interest rate on personal gold loans, which ranges from 8.5% to 8.70%. It even extends the repayment period to 2 to 36 months through Equated Monthly Instalments (EMI) or the option of an overdraft facility. The margin, which is the percentage of the loan amount ranging from 25% to 30%, is determined by the repayment option chosen by the borrower.

State Bank of India does not charge any processing fee for its gold loan; however, borrowers must cover the cost of gold appraiser charges for assessing the purity and quantity of the metal. SBI also offers home loans with gold as collateral with an interest rate of 8.70% for a tenure of up to 12 months.

3- Punjab and Sind Bank

Punjab and Sind Bank provide short-term loans between INR 10,000 to 25 lakh. The loans are given against 65% to 75% of the loan-to-value ratio of gold jewellery ornaments and coins. The repayment period for this loan is capped at 12 months. Here, the borrower gets the flexibility to opt for a demand loan term loan or overdraft credit facility. The repayment structure is drafted so borrowers are allowed monthly, quarterly, or half-yearly disbursement. Punjab and Sind Bank gold loans carry an interest rate of 8.60%, and the processing fee ranges from INR 500 to INR 10000, which is determined based on the loan amount.

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4- Punjab National Bank

Punjab National Bank provides loans secured by gold jewellery coins and sovereign gold bonds that RBI issues. These are also treated as Government of India stocks. In the case of Sovereign Gold Bonds, the borrower pledges these bonds to the banks. The bonds are maintained in dematerialised form within a demat account with NSDL, a depository participant. The borrower can avail of need-based finance starting from INR 50,000.

Punjab National Bank offers personal gold loans and loans against Sovereign Gold Bonds, which allows borrowers to choose between a demand loan with bullet and EMI options or an overdraft credit facility. Here, the loan terms depend on the purity and quantity of the gold. A personal gold loan has a repayment tenure of up to 12 months, while a loan taken against a Sovereign Gold Bond can have a maximum repayment tenure of 8 years. It is noteworthy that Punjab National Bank also extends demand loans against gold for agricultural purposes with an interest rate of 8.10%

5- Bank of Baroda

Bank of Baroda offers loans against gold with a minimum purity of 18 carats at an interest rate of 8.85% per year. The repayment period for demand loans and overdraft facilities is 12 months. The EMI-based payments have a maximum tenure of 36 months. The borrower can choose the loan before the scheduled date without incurring pre-closure or pre-payment charges. Bank of Baroda also extends cash credit and demand loans to individuals engaged in agriculture businesses and allied activities. The interest rate for these loans starts at 8.50% per year, which is applicable for amounts exceeding rupees INR 3 lahks up to INR 50 lahks with tenure of up to 12 months. 

6- Tamilnad Mercantile Bank

Tamil Nadu Mercantile Bank offers loans against gold with a minimum purity of 18 carats. It provides loans for both agricultural and non-agricultural purposes. The bank offers personal gold loans starting from as low as INR 3,000 with an interest range ranging from 9.15% to 9.40%. It also has repayment tenure options from 6 to 12 months, but a loan above INR 10 lakh requires permission from the relationship manager. Tamilnad Mercantile Bank also levies fees for handling, inspection, safekeeping, and appraisal charges on gold loans. These charges are subject to detection based on the relationship of borrowers with the bank. For agriculture gold loans, the Tamilnad Mercantile Bank offers an interest rate of 8.90% for a tenure of up to 12 months.

7- Canara Bank

Canara Bank is one of those few banks offering concessional lending rates and a preferential interest rate of 9.15% for women gold loan borrowers. For other individuals, the interest rates are 9.50%. The loan amount ranges from a minimum of INR 5,000 to a maximum of INR 30 lakh, depending on the purity and quantity of the gold pledged as security. Apart from gold ornaments and jewellery, Canara Bank also accepts specially minted gold coins, but they should not exceed 50 grams per customer. Canara Bank provides loans for agricultural and non-agricultural purposes with a 6 to 12-month tenure.

8- Indian Overseas Bank

Indian overseas provides loans secured by gold with a minimum purity of 18 carats for agricultural and non-agricultural purposes. Here, women gold borrowers are offered special benefits as they are given concessions on interest rates and additional perks. They receive free accidental insurance cover of INR 2 lakh under the Pradhan Mantri Suraksha Bima Yojana scheme. The bank does not impose charges for documentation and pre-closure but charges a processing fee. It also provides a bullet repayment option for a loan tenure of 6 to 12 months.

Final Words

Gold loans offer various benefits, available at lower interest rates since you already provide collateral. Apart from gold jewellery, you need no security or collateral; the funds can be used for various purposes. It only requires a little documentation, and your credit history does not even need to be good to avail of the loan. Since many banks offer gold loans at the best interest rate, you can secure one from the abovementioned banks.

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