Gold loans in India carry risks of value decline

Gold loans are becoming popular in India as households and small businesses use them to access cash without selling their gold. The gold loan market is expected to double by 2029, driven by rising gold prices and financial needs. However, borrowers should be cautious. If gold prices fall, the value of the loan can become unfavorable, leading to potential auction of the pledged gold if repayments are missed. Lenders are implementing measures to manage these risks. While gold loans provide quick liquidity, they come with interest costs and risks of default. Experts advise careful planning and suggest considering other investment options instead of relying solely on gold loans.