If you want to unlock the value of your gold without selling it, a gold loan is one of the best financial options available. In 2025, several public sector banks in India are offering gold loans at very competitive interest rates, making it easier for borrowers to access quick funds.
Why is Demand for Gold Loans Rising?
Gold loans are popular because they provide instant access to cash without selling your gold. These loans are often used for urgent needs like medical expenses, business investments, weddings, or education. Since gold acts as collateral, the risk for banks is lower, which allows them to offer lower interest rates compared to personal loans.
In 2025, demand for gold loans has grown sharply. The gold loan market has touched nearly ₹2.94 lakh crore, recording a 122% year-on-year growth. The rise in gold prices has increased the loan value borrowers can access, making gold loans even more attractive.
Why is Gold Becoming More Valuable?
Gold has given strong returns this year, rising by nearly 44% in 2025 alone. Several global factors have contributed:
- Central banks worldwide have almost doubled their gold purchases over the last decade.
- The US Federal Reserve’s rate cut of 25 basis points in September boosted gold prices further.
- Fears of a global recession and rising uncertainty pushed investors toward gold as a safe asset.
- A weakening rupee also enhanced returns for Indian investors.
With higher gold prices, borrowers can now get larger loan amounts against the same gold collateral, making gold loans more beneficial.
Gold Loan Interest Rates: Top 5 Government Banks
Here are the five government banks offering the cheapest gold loans in 2025:
- Central Bank of India: 8.05% – 8.35% p.a. | Loan up to ₹40 lakh | Processing fee 0.25% + GST | Tenure up to 12 months.
- Indian Overseas Bank (IOB): 8.20% – 11.60% p.a. | Loan up to ₹50 lakh | Tenure up to 12 months.
- Punjab National Bank (PNB): Starting at 8.35% p.a. | Loan up to ₹25 lakh | Processing fee 0.30% + GST | Tenure up to 12 months.
- Bank of India (BOI): 8.60% – 8.75% p.a. | Loan up to ₹30 lakh | Processing fee up to ₹1,500 | Tenure up to 12 months.
- State Bank of India (SBI): Starting at 8.75% p.a. | Loan up to ₹50 lakh | Processing fee 0.25% | Tenure up to 36 months.
Key Takeaway
With gold prices soaring and demand for loans increasing, government banks are offering affordable gold loan options to meet customer needs. Among these, the Central Bank of India currently provides the lowest interest rate, while SBI offers the longest repayment tenure of up to 3 years. For anyone looking for a safe, quick, and cost-effective borrowing option, a gold loan from these banks is an excellent choice in 2025.
