Gold Loan Documents—Eligibility Criteria

This article provides information on the essential documents and eligibility criteria required to obtain a gold loan. If you're considering taking out a gold loan, this guide will help you prepare the necessary documents and understand the eligibility criteria!

16 Mar,2023 12:48 IST 2748 Views
Gold Loan Documents—Eligibility Criteria

Gold has been accumulated as an asset for security in Indian households for centuries, meant to be liquidated and used mainly in times of family weddings or even financial trouble.

Over the years, however, the importance of gold as a valuable asset has increased as there are now more options to monetize this asset to fund needs other than those in distress, including part-funding a destination wedding, a dream vacation, or funding for educational needs.

A gold loan is a secured loan that a borrower obtains from a bank or non-banking financial institution by pledging their gold to the lender as security. The jewellery is given back to the borrower after repayment of the borrowed funds.

A gold asset, owned by the borrower, must be pledged as security, just like a mortgage loan. However, it typically lasts for a shorter period, usually between six and 24 months.

As it is a secured loan, taking out such credit is not a difficult process. Documentation and evaluation are two important parts of the process.

Loan Sanction Process

The borrower needs to submit an application form and the requisite documents to a bank or non-banking finance company, either online or by visiting a branch of a lender.

Usually, a proof of income is not mandatory to avail the loan. Also, no separate address proof is required in case a document contains both identity proof and the address of the applicant.

The lender verifies the submitted documents and checks the purity and weight of the gold that would be kept as collateral. After the quality and value of the gold are determined and the Know Your Customer (KYC) process is completed, the lender and the customer agree upon the loan amount and terms of the gold loan. These terms include the interest rate, tenure and processing charges.

What Documents Are Required?

Apart from gold jewellery, the borrower also needs to furnish some documents to establish identity and eligibility for the loan. The applicant needs to furnish the following documents to avail the gold loan:
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• Aadhaar card.
• Identity proof—Any one of PAN card, passport, driving license or voter’s ID.
• Address proof—Any one of passport, driving license, electricity bill or gas bill.
• Proof of income is usually not a mandatory document required to avail of a gold loan, as the gold is a secured asset held by the lender.
• PAN card details are usually not required to be submitted for gold loans. However, for large loans of over Rs 5 lakh, one may be required to furnish their PAN card.

Eligibility For A Gold Loan

Any lender who offers a gold loan will base the loan’s size on the total weight of the gold. The purity of the jewellery must be above 18 karats of gold to get the maximum loan amount. It must be noted that the weight of other items, such as stones, gems, diamonds, etc., is not usually included when determining the total weight of the gold ornaments. The ornaments' gold content will only be calculated.

• Any individual who has gold jewellery is eligible to apply. 
• The applicant should be in the age group of 18 years to 60 years.
• A loan against gold is granted to professionals, self-employed, business owners, and other individuals.
• As it is a secured loan with the lender having possession of the asset, a poor credit score usually does not have a great bearing on the approval of such a loan.


A gold loan is simple to apply for and requires minimal paperwork. Furthermore, neither the approval procedure nor the amount or rate of interest charged are influenced by the borrower's credit history.

Even though there is a sizable unregulated market out there with local lenders and pawn shops, it is best to get a gold loan from a reputable lender like IIFL Finance because the leading NBFC provides a simple process, competitive interest rates, and loans for a very low cost.

More importantly, IIFL Finance stores the gold jewellery that has been pledged safely in vaults to eliminate any possibility of theft or damage. This guarantees that when borrowers repay their loans and close the account, their priceless jewellery will be returned to them safely.

IIFL Digital Gold Loan product makes it a hassle-free and fully digital process for the borrower. Unlike standalone gold loan companies and most banks that expect consumers to still visit their branches, IIFL Finance has taken the service right to the customer’s doorstep with a truly digital product.

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Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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