CNN Central News & Network-ITDC India Epress/ITDC News Bhopal: Gold loans have become one of the most straightforward ways for individuals across India to access funds quickly, without the lengthy paperwork or credit score requirements that come with most other loan types. As more people look to unlock the value sitting in their gold jewellery, ornaments and coins, Bajaj Finance has outlined the key things every applicant should understand before walking into a branch or applying online.
What a gold loan actually is
A gold loan is a secured loan where the borrower pledges gold jewellery, ornaments or coins as collateral in exchange for funds. The loan amount is determined by the weight and purity of the gold, the applicable gold rate on the day of assessment, and the Loan-to-Value (LTV) ratio set by the lender. Once the loan is repaid in full, the gold is returned to the borrower.
Unlike personal loans or credit cards, a gold loan offers a low interest rate and easy-to-meet eligibility criteria. This makes it accessible to a wide range of borrowers — salaried individuals, self-employed professionals, and pensioners among them.
Who can apply
Bajaj Finance accepts gold loan applications from Indian citizens between the ages of 21 and 80 years. The eligibility criteria are intentionally simple — the focus is on the quality and purity of the gold being pledged, not solely on the applicant's financial history.
Gold jewellery and ornaments between 18 karat and 22 karat purity are accepted as collateral. Gold coins up to 24 karat purity are also eligible. Items below 18 karat purity — such as 14 karat or 9 karat gold — do not qualify.
How the loan amount is calculated
The loan amount is not based on what the borrower originally paid for their gold. It is calculated using the weight and purity of the gold, combined with the prevailing market rate at the time of assessment.
For valuation, Bajaj Finance uses whichever is lower between the previous day's closing price and the 30-day average closing price published by the India Bullion and Jewellers Association (IBJA) or a SEBI-regulated commodity exchange. This method ensures that the valuation is fair, consistent, and not inflated by short-term price spikes.
Decorative elements on jewellery — such as stones, enamel, or lac work — are excluded from the valuation. Only the actual gold content is counted.
Bajaj Finance offers gold loans ranging from Rs. 5,000 to Rs. 2 crore, depending on the gold's assessed value and the applicable LTV ratio.
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