Gold Loan in Nepal 2026 — Interest Rates, LTV Ratio & Best Banks Compared

Gold loan against jewellery | Interest rate comparison | Updated for 2026

A gold loan is one of the fastest and most accessible ways to raise cash in Nepal, since the collateral itself does most of the work in securing the lender's risk. This guide walks through how Nepali banks value pledged gold, how interest rates compare across institution types, the NRB rules that cap how much you can borrow, and what happens to your loan if gold prices move sharply after you've pledged it.

What Is a Gold Loan and How Do Nepali Banks Value Pledged Gold?

A gold loan (locally called sun chandi karja) lets you borrow money by pledging gold or silver jewellery, coins, or bars as collateral. Because the bank holds a highly liquid, easily valued asset, gold loans are processed faster and typically carry lower interest rates than unsecured personal loans.

To value your gold, the bank's appraiser assesses the purity (checked through touchstone testing, acid testing, or an electronic purity tester) and net weight after deducting stones, beads, or other non-gold materials set into the piece. The loan amount is then calculated as a percentage of this assessed value, based on the prevailing market gold rate on the day of pledging.

Interest Rate Comparison Across Institution Types

Gold loan interest rates vary meaningfully depending on the class of lending institution, since each operates with a different cost of funds and risk appetite. Commercial banks ('A' class) typically offer the most competitive rates, while cooperatives — though often faster and more flexible on documentation — tend to charge more.

Loan-to-Value (LTV) Ratio Rules Set by NRB

Nepal Rastra Bank sets a ceiling on how much banks and financial institutions can lend against pledged gold, expressed as the loan-to-value (LTV) ratio. Under prevailing guidelines, banks are generally permitted to lend up to a set maximum percentage of the assessed gold value — commonly cited around 75% — with the remainder acting as a margin cushion that protects the lender if gold prices fall before the loan is repaid.

This LTV ceiling can be revised by NRB through periodic monetary policy circulars, and individual institutions may choose to lend below the maximum permitted ratio as part of their own risk policy. Always confirm the exact, currently applicable LTV limit with your lender rather than relying on a fixed number, since regulatory limits do change.

Documents Required, Tenure, and Repayment Options

Documents typically required: Citizenship certificate or passport, a passport-sized photo, and proof of ownership of the gold being pledged (in some cases, a self-declaration is sufficient for jewellery).

Loan tenure: Gold loans in Nepal are commonly offered for short to medium terms, often renewable, ranging from a few months up to one or two years depending on the institution's policy.

Repayment options: Most lenders offer flexible structures — paying interest monthly with principal at maturity, equal instalments covering both principal and interest, or a bullet repayment of the full amount plus interest at the end of the tenure.

Risk of Rising Gold Prices vs Falling Gold Prices on Your Pledged Loan

If gold prices rise after you take the loan, the value of your collateral increases relative to your outstanding loan amount — generally a favourable position, and some lenders may allow a top-up loan against the higher value.

If gold prices fall significantly, the collateral's market value can drop closer to — or even below — the outstanding loan balance. In such cases, lenders may ask you to either pledge additional gold, repay part of the loan to restore the required margin, or in extreme cases, proceed toward auctioning the collateral if the loan turns overdue and unresolved.

Frequently Asked Questions