A gold loan is a secured form of borrowing in which customers pledge gold jewellery, ornaments or gold coins as collateral in exchange for funds. The loan amount depends on the weight and purity of the pledged gold, the prevailing market price and the Loan-to-Value ratio prescribed by the lender. After complete repayment of the loan, the pledged gold is returned to the borrower.
Compared with personal loans and credit cards, gold loans offer lower interest rates and easier eligibility requirements, making them suitable for salaried individuals, self-employed professionals and pensioners.
Bajaj Finance accepts applications from Indian citizens aged between 21 and 80 years. The company evaluates the quality and purity of the pledged gold rather than relying solely on the applicant's financial history. Gold jewellery and ornaments with purity ranging from 18 karat to 22 karat are accepted as collateral, while gold coins with purity up to 24 karat are also eligible. Gold items with purity below 18 karat, including 14 karat and 9 karat gold, are not accepted.
The value of the loan is determined by the weight and purity of the gold and the prevailing market rate at the time of assessment rather than the original purchase price. Bajaj Finance follows a valuation method based on the lower of the previous day's closing price or the 30-day average closing price published by the India Bullion and Jewellers Association or a Securities and Exchange Board of India-regulated commodity exchange. Decorative components such as stones, enamel and lac work are excluded from valuation, with only the actual gold content being considered.
Depending on the assessed value of the pledged gold and the applicable Loan-to-Value ratio, Bajaj Finance provides loans ranging from Rs. 5,000 to Rs. 2 crore.
The documentation process remains simple, requiring only one valid Know Your Customer document. Acceptable documents include an Aadhaar card, voter identity card, passport, driving licence, National Rural Employment Guarantee Act job card and a letter issued by the National Population Register. No proof of income, salary slips or bank statements are required for obtaining the loan.
Bajaj Finance offers multiple repayment structures to accommodate varying financial needs. Borrowers can opt for monthly, bi-monthly, quarterly, half-yearly or annual interest payments, with the principal amount payable at the end of the loan tenure. Partial prepayment during the loan period is permitted, and there are no foreclosure charges, allowing customers to close the loan before maturity without penalty.
Addressing concerns regarding the safety of pledged assets, Bajaj Finance stated that all gold is stored in secure vaults and remains fully insured against loss, theft, burglary and fire at the branch throughout the loan tenure. The pledged gold is returned to customers after full repayment.
Borrowers can apply for a gold loan by visiting a Bajaj Finance branch with their gold and a valid Know Your Customer document. After assessment of the gold's purity and weight, the eligible loan amount is determined and disbursed, usually on the same day. Customers may also initiate applications through the company's mobile application, after which a representative guides them through the remaining process.
The company clarified that a gold loan is recorded in the borrower's credit history as a secured loan and does not adversely affect the credit score by itself. Timely repayments can improve a borrower's Credit Information Bureau score over time, while delayed or missed payments can negatively impact it. Customers are advised to use the gold loan calculator to plan repayments before taking a loan.
Bajaj Finance Limited, a subsidiary of Bajaj Finserv Limited, is a deposit-taking Non-Banking Financial Company registered with the Reserve Bank of India and classified as a Non-Banking Financial Company-Investment and Credit Company. The company operates across retail, small and medium enterprises and commercial lending segments in urban and rural India. It also accepts public and corporate deposits and offers a wide range of financial products. With a history spanning thirty-five years, the company has built a consolidated customer base of 69.14 million. Bajaj Finance holds domestic credit ratings of AAA with a stable outlook for long-term borrowing, A1+ for short-term borrowing and AAA with a stable outlook from CRISIL and ICRA for its fixed deposit programme. Internationally, it has received a long-term issuer credit rating of BB+ with a positive outlook and a short-term rating of B from S&P Global Ratings.
The latest advisory from Bajaj Finance underscores the growing role of gold loans as a reliable source of emergency funds, offering borrowers a combination of easy access, flexible repayment and secured storage while ensuring transparency in valuation and lending practices.
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