Gold Loan Interest Rate: Gold and silver prices saw a sharp increase during the year 2025. As a result of this increase, the prices of both precious metals reached record levels. Gold has surpassed Rs 1.20 lakh. As a result of this rising price, the demand for gold loans has increased by 122 percent in 2025.
The amount of gold loans has risen to Rs 2.94 lakh crore. The reason for the increased demand for gold loans is the high gold rate and the relaxed regulations of the Reserve Bank of India (RBI).
Gold loans don’t require people to sell their gold and provide instant access to the loan. These loans are typically used for emergency expenses, business needs, weddings, or education expenses. Since these loans are provided against your gold as collateral, the risk for banks is lower. Interest rates are also lower than those for personal loans.
Gold has delivered impressive returns to investors in 2025, with a 44% increase so far this year. According to a Tata Mutual Fund report, central banks worldwide have nearly doubled their gold purchases over the past 10 years. The US Federal Reserve (USFED) cut rates by 25 basis points (0.25%) on September 17th, leading to a surge in gold prices. Global uncertainty and growing fears of an economic recession have led investors to increase their investments in gold, a safe asset. The weakening rupee has also boosted gold returns for Indian investors. These factors have led to a sharp increase in demand for gold loans, as people are able to secure higher loans against the increased value of gold.
Central Bank of India offers gold loan interest rates ranging from 8.05% to 8.35%. There is a processing fee of 0.25% on gold loans available for 12 months. Indian Overseas Bank is offering interest rates ranging from 8.20% to 11.60%. The bank offers loans up to Rs 50 lakh. Punjab National Bank’s interest rate starts at 8.35%. Here, 0.30% of the loan amount plus GST will be charged as processing fee.
Additionally, Bank of India’s interest rates range from 8.6% to 8.75%. The bank charges a processing fee of ₹1,500 for loans ranging from Rs 20,000 to Rs 30 lakh. The loan is offered for a 12-month term. The country’s largest lender, State Bank of India (SBI), is offering gold loans at 8.75% for a term of 36 months.