Top 5 Government Banks Offering the Cheapest Gold Loans in India — Check Latest Interest Rates and Loan Details

Gold Loan Interest Rate 2025: If you’re planning to unlock the value of your gold without selling it, a gold loan can be one of the smartest financial options. In 2025, the demand for gold loans in India has hit an all-time high, with major public sector banks such as Central Bank of India, Punjab National Bank (PNB), and State Bank of India (SBI) offering some of the most affordable interest rates in the market.

According to official data, India’s gold loan market has witnessed a remarkable 122% year-on-year growth, reaching ₹2.94 lakh crore this year. The key reason behind this surge is the rising gold prices, which have significantly increased the amount borrowers can get by pledging their jewelry.

Why Gold Loans Are in High Demand

One of the biggest advantages of a gold loan is that you don’t have to sell your gold to access funds. The loan is secured against the gold you pledge, making it a low-risk product for banks and a quick cash solution for borrowers.

Gold loans are widely used to cover urgent expenses such as medical emergencies, education, weddings, or business needs. Because the collateral is already in the form of gold, banks face minimal risk — resulting in lower interest rates compared to personal loans.

In 2025, the Indian gold market has also benefited from global economic uncertainty. Gold prices have climbed nearly 44% this year, supported by strong central bank buying, monetary easing by the US Federal Reserve, and a weaker Indian rupee. As gold prices increase, borrowers can now access higher loan amounts against the same quantity of gold, further boosting demand.

Top 5 Government Banks Offering the Lowest Gold Loan Interest Rates

If you’re considering taking a gold loan in 2025, here are the five government banks offering the most competitive rates:

1. Central Bank of India

• Interest Rate: 8.05% – 8.35% per annum

• Loan Tenure: Up to 12 months

• Processing Fee: 0.25% of the loan amount + GST

• Loan Amount: ₹10,000 – ₹40 lakh

The Central Bank of India currently offers the lowest gold loan interest rate among all public sector banks. The quick processing and minimal documentation make it a preferred choice for short-term borrowers.

2. Indian Overseas Bank (IOB)

• Interest Rate: 8.20% – 11.60% per annum

• Loan Tenure: Up to 12 months

• Processing Fee: Based on loan amount

• Loan Amount: ₹25,000 – ₹50 lakh

IOB offers flexible gold loan schemes suitable for both individuals and small businesses. The bank provides instant disbursal and flexible repayment options.

3. Punjab National Bank (PNB)

• Interest Rate: Starting from 8.35% per annum

• Loan Tenure: Up to 12 months

• Processing Fee: 0.30% of loan amount + GST

• Loan Amount: ₹25,000 – ₹25 lakh

PNB’s “Gold Loan Scheme” is known for its transparency and competitive pricing. Borrowers can apply online or visit their nearest branch for quick approval.

4. Bank of India (BOI)

• Interest Rate: 8.60% – 8.75% per annum

• Loan Tenure: Up to 12 months

• Processing Fee: Maximum ₹1,500

• Loan Amount: ₹20,000 – ₹30 lakh

Bank of India offers secured gold loans at affordable rates, making it ideal for small business owners and farmers seeking short-term credit.

5. State Bank of India (SBI)

• Interest Rate: Starting from 8.75% per annum

• Loan Tenure: Up to 36 months (3 years)

• Processing Fee: 0.25% of loan amount + GST

• Loan Amount: ₹20,000 – ₹50 lakh

SBI, India’s largest public sector bank, provides one of the longest repayment tenures in the gold loan segment. This makes it an excellent choice for those looking for manageable EMIs and flexible repayment plans.

Why Gold Loan Is a Smart Option in 2025

Gold loans are gaining popularity not just due to rising gold prices but also because they are faster, cheaper, and easier to access compared to personal loans. Most banks disburse the loan within hours of application, and credit history is not a major concern since the loan is secured.

Additionally, as inflation and global uncertainty persist, gold continues to be seen as a safe-haven asset. Experts advise borrowers to compare interest rates, processing fees, and repayment flexibility before choosing a bank.

Bottom Line

With gold prices at record highs and loan demand soaring, now is a favorable time for borrowers looking to leverage their gold for cash. Among all public sector banks, Central Bank of India, IOB, PNB, BOI, and SBI are currently offering the most attractive interest rates and easy loan processing options.

So if you need quick liquidity without selling your jewelry, a gold loan from a trusted government bank could be your best financial move in 2025.