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Gold loans: how much you can get, and what happens to your jewellery

6 min read
Gold chain being weighed on a digital scale

Short answer: Under RBI rules (fully in force since 1 April 2026), you can borrow up to 85% of the value of the gold metal in your jewellery on personal (consumption) loans up to ₹2.5 lakh. The limit is 80% up to ₹5 lakh and 75% above that. With a “bullet” loan, where you pay everything at the end, that limit must also cover the interest, so you get less cash. The lender must return your gold within 7 working days of full repayment. If the delay is its fault, it must pay you ₹5,000 a day. You must get notice before any auction, and any extra money from the sale comes back to you.

The situation

Lakshmi needs money for her son’s hospital bill. Her jewellery is the only thing of value the family owns. A gold-loan branch nearby promises money “in 30 minutes”. What will she get, and what could she lose?

How much can you borrow?

The limit is called the LTV (loan-to-value): the loan as a share of what your gold is worth.

Loan amount Maximum loan-to-value (LTV)
Up to ₹2.5 lakh 85% of the gold’s value
₹2.5 lakh to ₹5 lakh 80%
Above ₹5 lakh 75%

Only the gold itself counts, not stones or making charges. The lender uses the lower of two prices: the 30-day average and the previous day’s price. You have the right to watch while your gold is tested, and the lender must explain anything it takes off the value.

The bullet-loan catch

A bullet loan runs for up to 12 months. You pay the interest and the amount you borrowed (the principal) together at the end. Here the 85% limit applies to the total you’ll owe at the end, not just to the cash you get.

Lakshmi’s numbers

Fictional example: the gold price is made up. 20 g of 22-carat jewellery valued at ₹9,000 per gram. Bullet loan for 12 months at 12% a year (simple interest, for illustration).

  • Gold value: 20 × ₹9,000 = ₹1,80,000
  • 85% limit on the total owed: ₹1,53,000
  • Total owed = loan × 1.12, so the maximum loan = ₹1,53,000 ÷ 1.12 = ₹1,36,607
  • Interest at the end: about ₹16,393

So she gets about ₹1.37 lakh, not ₹1.53 lakh.

EMI or bullet?

An EMI is a fixed monthly payment that covers part of the loan and part of the interest.

EMI gold loan Bullet gold loan
Monthly payment Yes No: everything at the end (max 12 months)
Risk Missed EMIs add up One big payment at the end, and it’s easy to think it will be smaller than it is
Renewal — Only after paying the interest so far

Your rights

  • Getting your gold back: the same day if possible, and at the latest 7 working days after you repay in full. After that, if the delay is the lender’s fault, it owes you ₹5,000 per day of delay.
  • Damage or loss while the lender holds your gold: the lender must pay for repairs or pay you for the loss.
  • Before an auction: you must get proper notice. The lowest price the lender can accept (the reserve price) must be at least 90% of the current value, or 85% after two failed auctions. If money is left over after your dues are cleared, the lender must pay it to you within 7 working days.
  • Language: the lender must talk to you in your regional language or a language you choose.
  • Limits: at most 1 kg of gold ornaments and 50 g of gold coins per borrower. No loans against gold bars or gold funds.

Questions to ask before you sign

  1. What price per gram did you use? How much did you take off for purity or stones?
  2. Is this an EMI or bullet loan? What’s the total I pay at the end?
  3. What’s the APR in the KFS? (The APR is the full yearly cost, with interest and fees. The KFS is the Key Facts Statement, a short sheet with the loan’s main terms.) What are the late-payment charges?
  4. What happens at 12 months: what are the renewal terms and fees?
  5. How will you tell me before any auction, and in which language?
  6. What’s my pledge card number (the receipt for the gold you hand over), and where is the gold kept?

What to check today

  1. If you have a gold loan, find the maturity date (the day the loan must be fully repaid) and the total you owe.
  2. Keep your pledge card and KFS safe, and save the lender’s complaint contact.
  3. If you may not be able to repay, talk to the lender before the maturity date. (See Your next EMI doesn’t fit your budget.)

Sources and review

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Frequently asked questions

How much gold loan can I get on my jewellery?

It depends on the gold price and the loan size. For personal loans up to ₹2.5 lakh you can borrow up to 85% of the value of the gold metal. The limit is 80% up to ₹5 lakh and 75% above that. Stones and making charges don't count. The lender uses the lower of two prices: the 30-day average and the previous day's price.

Why did I get less cash on a bullet gold loan?

With a bullet loan you pay the interest and the amount borrowed together at the end, within 12 months. The 85% limit must cover that whole total, not just the cash. In our made-up example, gold worth ₹1,80,000 allows ₹1,53,000 in total. At 12% a year, the cash is about ₹1,36,607 and the interest about ₹16,393. Ask for the total you pay at the end.

How soon must the lender return my gold after I repay?

The same day if possible, and at the latest 7 working days after you repay in full. If the delay is the lender's fault, it must pay you ₹5,000 for each day of delay. Keep your pledge card (the receipt for the gold you hand over) and proof of payment. If the gold doesn't come back, complain in writing. Read How to complain.

Can the lender auction my gold without telling me?

No. You must get proper notice before any auction. The lowest price the lender can accept (the reserve price) must be at least 90% of the gold's current value, or 85% after two failed auctions. If money is left after your dues are cleared, the lender must pay it to you within 7 working days. Ask early how and in which language you'll be told.

Is an EMI gold loan better than a bullet gold loan?

Neither is always better. An EMI gold loan has a fixed monthly payment that covers part of the loan and part of the interest, but missed EMIs add up. A bullet loan has no monthly payment and one big payment at the end. Many people expect that payment to be smaller than it is. Compare the APR in each KFS and the total you will pay.

What if I can't repay my gold loan on time?

Talk to the lender before the maturity date (the day the loan must be fully repaid). Ask about the renewal terms and fees. A bullet loan can be renewed only after you pay the interest so far. Keep your pledge card and KFS safe, and save the lender's complaint contact. If other payments are also hard, read Your next EMI doesn't fit.