Planning to take a gold loan? Put up extra collateral if demanded by lender

If LTV ratio on your loan exceeds the regulatory cap, lender can sell pledged gold to recover dues

Gold closed at Rs 44,663 per 10 grams on Thursday, down 20.1 per cent from the peak of Rs 55,901 scaled on August 7, 2020. While this is good news for those looking to buy the yellow metal, it’s an entirely different story for those who have taken a gold loan. They need to understand the consequences of falling prices and act promptly.

A large number of people took gold loans during the past year to meet financial emergencies. Adhil Shetty, chief executive officer (CEO), BankBazaar, says, “Gold loans are easy to get as they are secured loans.”

Owing to buoyant prices,