What are gold loans and loans against FDs?
Both are secured loans that let you raise money from savings you already have, without selling them.
A gold loan is taken by pledging gold jewellery with a bank or NBFC. The lender tests and weighs it, keeps it sealed in its vault and lends you a percentage of its value. A loan against FD works on a bank fixed deposit: the bank marks a lien on your deposit and lends you a portion of it, while the FD keeps earning interest.
Because the lender holds strong security, credit history matters less than for an unsecured personal loan, and funds are usually released quickly.
How much you can borrow against gold
RBI caps the loan-to-value (LTV) ratio for gold loans, with the cap tiered by loan size:
| Loan amount | Maximum LTV |
|---|---|
| Up to ₹2.5 lakh | 85% |
| Above ₹2.5 lakh and up to ₹5 lakh | 80% |
| Above ₹5 lakh | 75% |
For bullet-repayment loans, the interest payable over the term is counted when checking the cap. Only the gold content of your jewellery is valued, not stones or making charges, and lenders use a benchmark price for 22-carat gold adjusted for purity. Bars and bullion are generally not accepted.
As an illustration, jewellery with ₹2 lakh of assessed gold value could support a loan of up to ₹1.7 lakh under the 85% tier. If it is a bullet loan, that ₹1.7 lakh has to cover the principal plus the interest due at maturity, so the amount you actually receive is lower.
Loan against FD: borrowing without breaking your deposit
If you need money for a short period and have a bank FD, borrowing against it is often cheaper than closing it early and accepting a reduced rate. Points to know:
- The loan is usually an overdraft or demand loan, up to a share of the deposit set by the bank.
- The rate is usually a margin above your FD rate.
- The loan must be repaid by the FD's maturity, or the bank adjusts the dues from the deposit.
Things to compare before you choose
- Valuation: whether purity is tested in front of you and how stones are deducted.
- Repayment structure that matches when your money will actually come in.
- Charges and APR, including processing, valuation and penal charges.
- Auction policy: notice period and how surplus is returned.
Our team compares gold and FD loan offers from 40+ banks and NBFCs, so you can choose on the full terms, not just the amount per gram.
