Tamil Nadu Raises Cooperative Gold Loan Limit to ₹10,000 per Gram

Tamil Nadu’s Cooperation Department has increased the maximum gold loan limit offered by cooperative banks and societies from ₹7,000 to ₹10,000 per gram of pledged gold. The move aims to improve access to credit for economically weaker sections and reduce dependence on private moneylenders and pawn brokers.

The revision comes a week after the launch of the Thaai Maaman Thanga Mothiram Thittam, under which newborns delivered at government healthcare facilities receive a one-gram, 22-carat gold ring.

How Much Gold Loan Can Customers Get?

Previously, cooperative banks and societies generally offered gold loans of up to ₹7,000 per gram, subject to the applicable loan-to-value limit of 75%. Under the revised limit, eligible borrowers can access a higher loan amount against pledged gold, subject to the applicable valuation and lending rules.

With gold priced at ₹13,675 per gram on Monday, the revised limit could provide borrowers with greater access to funds. However, the actual loan amount will depend on the lender’s valuation and applicable eligibility conditions.

How Do Gold Loan Offers Compare?

Indicative gold loan amounts offered by different lenders are as follows:

Cooperative banks and societies: Up to ₹10,000 per gram under the revised limit.

Private commercial banks: Approximately ₹9,600–₹10,400 per gram.

Public sector banks: Approximately ₹8,800–₹9,300 per gram.

Private pawn brokers and certain NBFCs: Approximately ₹10,500–₹11,000 per gram.

These figures are indicative and may vary according to the lender, gold purity, valuation method and loan terms.

Interest Rates and New Guidelines

Gold loan interest rates charged by banks generally range from 14% to 18%, according to the information provided. Last year, the Cooperation Department increased the interest rate on cooperative gold loans from 12% to 13%.

Officials believe that raising the lending limit will encourage more borrowers to approach cooperative institutions instead of relying on private moneylenders.

PACCS Profit Margins Capped at 2.25%

Separately, a meeting at the office of the Registrar of Cooperative Societies decided to cap the profit margin of Primary Agricultural Cooperative Credit Societies (PACCS) at 2.25%.

The meeting also decided that the interest rate charged by PACCS on gold loans funded through cash credit from central cooperative banks should be 1.25 percentage points lower than the rate charged on gold loans directly provided by branches of central cooperative banks.

What Does This Mean for Borrowers?

The higher lending limit could help eligible customers obtain more credit against their gold jewellery through cooperative institutions. Borrowers should compare interest rates, processing fees, repayment conditions and the total cost of borrowing before pledging their gold.

Important: The revised ₹10,000-per-gram figure is a maximum lending limit, not a guaranteed loan amount for every gram of gold pledged. Actual disbursement depends on the applicable rules and the lender’s assessment.