Bajaj Finance, one of India's largest non-banking financial companies, has reported steady growth in gold loan enquiries as more consumers recognize the enhanced value of their gold assets. Jewellery pledged today can secure significantly higher loan amounts than it could just a few years ago, solely due to the sharp appreciation in gold prices.
The calculation of a gold loan is directly linked to the weight and purity of the pledged gold, multiplied by the applicable gold rate at the time of assessment. As gold prices increase, the value of the pledged asset rises correspondingly, resulting in higher loan eligibility for borrowers.
For example, a household possessing 50 grams of 22-karat gold can now access considerably greater borrowing capacity compared to previous years. The difference between pledging gold when prices were around Rs. 55,000 per 10 grams and when they are approximately Rs. 95,000 per 10 grams translates into nearly double the loan amount from the same asset, without requiring additional documentation or changes in eligibility criteria.
Despite the sharp increase in gold prices, the gold loan process at Bajaj Finance remains unchanged. Applicants must be Indian citizens aged between 21 and 80 years. The company requires only one Know Your Customer document, which may include an Aadhaar card, voter identity card, passport, driving licence, National Rural Employment Guarantee Act job card, or a letter issued by the National Population Register.
Bajaj Finance accepts gold jewellery and ornaments with purity ranging from 18 karats to 22 karats. Gold coins of up to 24-karat purity are also eligible. Loan amounts range from Rs. 5,000 to Rs. 2 crore and are available at competitive annual interest rates.
According to the company, loan disbursement is completed on the same day in most cases once the application is processed at a branch.
The valuation process follows a transparent methodology. Bajaj Finance determines the value of pledged gold using 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. This approach is designed to protect borrowers from temporary market fluctuations and ensure consistency in assessments.
The company also clarified that decorative elements such as stones, gems, or enamel attached to jewellery are excluded from valuation. Only the actual gold content is considered during assessment.
Financial experts note that gold stored in lockers remains a non-income-generating asset. A gold loan enables households to unlock the value of their gold holdings to meet urgent financial requirements, including medical emergencies, educational expenses, business needs, or other immediate obligations, while retaining ownership of the asset. Upon full repayment of the loan, the pledged jewellery is returned to the borrower.
With gold prices reaching historic highs, the borrowing capacity available against household gold has expanded significantly. For families evaluating financing options, the current market environment offers an opportunity to leverage existing gold assets without selling them, making gold loans an increasingly relevant financial solution.
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 enterprise, and commercial lending segments in both urban and rural markets. It also accepts public and corporate deposits and provides a range of financial services.
With a customer franchise of 69.14 million on a consolidated basis and a history spanning thirty-five years, Bajaj Finance has emerged as a leading participant in India's non-banking financial sector. The company holds top domestic credit ratings, including AAA with a Stable outlook for long-term borrowing and A1+ for short-term borrowing, along with CRISIL AAA Stable and ICRA AAA Stable ratings for its fixed deposit programme. Internationally, it holds a BB+ Positive long-term issuer credit rating and a B short-term rating from Standard and Poor's Global Ratings.
The surge in gold prices has transformed dormant household assets into a stronger source of financial liquidity. As borrowing potential rises alongside gold valuations, gold loans are becoming an increasingly significant financing avenue for Indian households seeking immediate access to funds while preserving ownership of their valuable assets.
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