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Home Finance Gold loans – History and Overview of Gold Loans with BOI

Gold loans – History and Overview of Gold Loans with BOI

Gold symbolises wealth. The picture of wealth and prosperity comes to mind when one thinks about gold. Purchasing this precious metal during an auspicious occasion such as weddings has become a custom, passed down through generations. Gold has been mentioned throughout history, and one can say for a fact that almost every household in India has some form of gold ornament or the other. It is the heirloom that gets passed on to the next generation that not only carries great sentimental value but financial security as well.  Goal loans have become one of the fastest growing services in the Indian loan sector. Keeping this in mind, the Bank of India has also developed a portfolio of Bank of India gold loan schemes to meet the short-term financing requirements of the people.

Life is uncertain, and one may need immediate unexpected cash for medical emergencies, business challenges, or other needs. In such times, the gold lying in one’s house can be used as collateral to get a loan from the Bank of India. Bank of India gold loan interest rate is charged, and after paying off the loan and interest within a stipulated time, the gold pledged as collateral can be returned. Even history testifies to the fact of gold being used as collateral by Zamindars and Saavkars. Currently, several reputed banks and Non-Banking Financial Companies (NBFCs) accept gold jewellery and ornaments as security to provide loans.

Plethora of gold loan options in the Indian market

The loan amount one can get against a gold ornament depends on the purity of the gold in the jewellery, the LTV Ratio, and other factors. Different lenders have different schemes implemented to provide gold loans to customers. As an example, we see that the loan quantum is different for different lenders. Let us look at the following table to know the minimum and maximum gold loan amounts offered by some of the banks in India.

Bank / NBFC Gold Loan Minimum Amount Maximum Amount
SBI Gold Loan Rs 20,000 Rs 50 lakhs
Canara Bank Gold Loan Rs 10,000 Rs 10 lakhs
Muthoot finance gold loan Rs 1,500 Rs. 1 Cr
Bank of India gold loan NA Rs.50 Lakh

The interest rate on a gold loan also differs with each bank. Banks follow the RBI and internal guidelines to derive their interest rates.

Does the credibility of the lender matter while availing gold loans? 

The credibility of the lender is important to consider as the gold which one will keep as a pledge will be deposited physically at the lender’s designated safe houses. This makes the gold loan secure as the lender can make good the credit on non-repayment by selling off the gold pledged. However, the value of the gold is always higher than the loan value, and it will be detrimental if one does not get one’s gold back. Therefore, a thorough background check of the lender is necessary. One must know the safety measures taken by the lender to safeguard the gold deposited as a pledge. Companies or banks that do not have a good reputation in the market or are not regulated by the bank are more prone to risks.

Bank of India was founded on 7th September 1906 in Mumbai. With over a hundred years of history, the bank has grown to over 5100+ branches spread over all states/ union territories in India. It has become the bank of choice for corporates, medium business, retail customers, mass market and rural markets.

What can gold loans be used for?

In India, gold loans can be used for agriculture and allied activities, business activities, or personal needs like weddings, education, medical emergencies, etc.

Bank of India gold loans are for agricultural and allied activities so that formers can get timely finance to get their business going. Bank of India gold loans can also be used for business and personal needs.

Type of Bank of India gold loans

  • For Agriculture and Allied activities
    • Star Gold Agriculture Multipurpose loan
    • Star Gold agriculture overdraft
  • For Business Related
    • Star Gold MSME and OPS Loan
    • Star Gold MSME Overdraft
  • For Personal Needs
    • Star Gold Personal Loan
    • Star Gold Personal Overdraft

Features Bank of India gold loans

  • Loans are available upto 85 % of the gold value.
  • Nominal or low processing charge given.
  • No prepayment and other charges.
  • Easy repayment terms provided.
  • Overdraft facility available.
  • No pre closure charges issued.
  • Attractive rate of Interest.
  • Maximum loan per gram/carat.
  • Demand loan & Overdraft facility available.
  • Special Concession in ROI for hallmarked jewellery


Bank of India gold loans can be availed by any resident Indian who is a citizen of India as per FEMA guidelines, is the age of 18 years and above, and who is a lawful owner of the gold ornaments or gold coins being pledged.

Quantum of finance

For Agricultural/ MSME/ Retail and Other Personal needs: Maximum Rs.50 Lakh

Before applying for Bank of India gold loan, one needs the following

  • KYC documents (identity proof and address proof).
  • Gold jewellery/coin that can be pledged.
  • Land holding particulars if purpose is for agriculture and the loan amount should be more than Rs.2.00 lacs.

Bank of India gold loan interest rate

Activity Repayment Upto 12 months Repayment Above 12 months upto 36 months
Agriculture 1-Y MCLR 1-Y MCLR+0.30%
Food and Agro RBLR+0.50% RBLR+0.80%
MSME/OPS RBLR+0.80% RBLR+1.30%
Consumption/Non priority 1-Y MCLR+1.15% 1-Y MCLR+1.65%

Understanding interest terms

MCLR – Marginal Cost of Funds based Lending Rate (MCLR) is the minimum lending rate below which a bank or NBFC cannot lend. This prevents customers or borrowers from getting an undue advantage. MCLR depends on the cost of funds of the Bank. It is calculated based on the loan tenor which is internal in nature.

RBLR – Revised Repo Based Lending Rate (RBLR) is linked to the REPO rate announced by the Reserve Bank of India (RBI). RBLR is external and governed by RBI. It has a direct link to the inflation of the economy.

Processing charges

One must also be aware of the processing charges of the Bank of India to avoid unplanned expenses while availing of the gold loan.

Limit Charges
Upto 1.00 lakh Nil
Over 1.00 lakh to Rs.5.00 lacs Rs.125/- per lakh; Max. Rs.250/-
Over Rs.5.00 lacs Rs.125/- per lakh; Max. Rs.1000/-

Documents required for availing the gold loan

Individual · PAN Card

· Aadhar Card

Sole Proprietorship · PAN Card

· Udyam Registration (also known as an MSME Registration)

What happens if an individual cannot repay their loan amount?

Applying for a gold loan is a relatively simple and fast process. One can get the loan within a day. Appraisal of the gold may take time, but once that is done, the disbursement of the loan is quick. However, before signing the agreement paper, one needs to note the repayment terms of the loan. If one is unable to repay the loan in time, the Bank of India has the right to make good the due by auctioning off the gold ornaments pledged after providing periodic reminders to the borrower about the payment after the end of the tenure. After that, the Bank delivers a final notice to the customer via call or message about the auction. The bank can then sell the deposited gold in an auction.

For more information regarding Bank of India gold loans, go to the nearest branch. You can also send SMS-‘GOLD’ to 7669021290 or give a missed call to 8010968370.

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