A gold loan has emerged as a better option than a personal loan coming at towering interest rates. Gold loans come at much cheaper rates than the unsecured personal loans. While an unsecured personal loan comes at 17% rate of interest, a gold loan can be taken at just 12%.

This period is also an indicator that lenders would be focusing more on gold loans as they allow them to access the individual loans segment without any risk involved.

HDFC Bank is sincerely treading ahead with its plans to increase its gold loan portfolio with tools like easy processing methods and competitive interest rates. The bank has experienced a growth in its gold loan portfolio in the last two years at a staggering rate of over 60%.

Public sector banks like Canara Bank, Syndicate Bank etc provide loans in the range of 11.5% to 13.75%.

Amongst the non banking financial entities, the largest and strongest network lies with companies like Manappuram Finance. The company offers loans at 12% and offers loans as high as Rs. 1,600 per gram.

"With the opportunity being vast, we will continue to look to grow this portfolio. We plan to increase the number of branches offering gold loans from 150 to 600 over the course of next year," said Biju Pillai, executive vice-president and business head at HDFC Bank.

Ajay Mitra, managing director India, West Asia and Turkey, World Gold Council, said, "Acceptance of gold for loans by banks and financial institutions is an important development that will infuse greater confidence in gold as an asset class."