₹23,381 Crore Gold Pledged In Gujarat As Borrowers Turn To Gold Loans

The trend of borrowing money against gold has reached a significant level in Gujarat, with citizens reportedly pledging gold worth around ₹23,381 crore with various banks and finance companies to obtain gold loans.

The growing demand is being attributed to financial emergencies, cash-flow difficulties in businesses, inflation, medical expenses and children's education costs. The trend is reportedly gaining traction among middle-class and upper-middle-class households.

Quick Process Makes Gold Loans Attractive

Compared with other types of loans, gold loans generally involve a faster process and less paperwork, making them an attractive option for borrowers in need of immediate funds.

Public and private sector banks, along with non-banking financial companies (NBFCs), are also actively offering gold loans through marketing campaigns and competitive interest rates.

Rising gold prices have further made it possible for borrowers to obtain a higher loan amount against their pledged jewellery.

Gold Loan Defaults Also Declining

According to the Union Finance Ministry, the number of gold loan defaulters has also declined.

The combination of high gold prices, easier access to credit and the need for quick liquidity has contributed to the growing popularity of gold-backed borrowing.

Changing Attitude Towards Pledging Gold

Pledging gold was once viewed negatively from a social and financial perspective. However, attitudes have reportedly changed, with people increasingly viewing gold as a financial asset that can provide immediate liquidity during emergencies.

Instead of keeping gold as a dormant asset, households are increasingly using it to meet urgent financial requirements.

Gold Loans Ahead Of Personal And Vehicle Loans

Gold loans have reportedly emerged as the first preference among loan options in Gujarat, followed by personal loans and vehicle loans.

The reported ₹23,381 crore worth of gold pledged for loans highlights the growing role of gold-backed credit in Gujarat and the changing perception of gold as a readily accessible source of funds during financial emergencies.