KOCHI: Look closely at the walls near busy junctions and bus stands, and you will likely spot posters offering to “Panayathilirikkunna swarnam avide vannu uyarnna vilakku eduthu vilkkuvaan” (release your pledged gold and sell it at higher prices).
What once seemed unusual has now become common. With gold prices soaring to record highs, agencies promising to help borrowers retrieve pledged jewellery are increasingly visible, reflecting mounting financial stress among families struggling to reclaim their ornaments.
Mariamma, an elderly house cleaner from Kottayam, pledged 10 sovereigns of gold jewellery (80 grams) at a bank to meet hospital expenses. The ornaments, accumulated over the years, were her only financial security and meant to remain within the family. She hoped to repay the loan once her income stabilised. But her earnings remained irregular, interest accumulated, and she could not arrange the repayment in time. With limited awareness of alternatives, her jewellery was eventually sent for auction.
Her experience reflects a wider trend as gold prices continue to surge.
Around 2020, gold in India was priced at roughly Rs 48,000 per 10 grams. Since then, prices have risen sharply due to global uncertainty, inflation, geopolitical conflicts, and the weakening rupee. By 2025, gold had crossed ₹80,000 per 10 grams. As of February 11, 2026, prices have reached record levels. Currently, 22-carat gold, commonly used for jewellery, costs about Rs 13,930 per gram, while 24-carat gold is close to Rs 15,440 per gram, pushing the price of 10 grams of jewellery gold to nearly Rs 1.44 lakh.
For families who pledged gold several years ago, the value of their jewellery has nearly doubled. But the price surge has not necessarily translated into relief for borrowers.
Banks do not calculate gold loans based on retail jewellery prices. Loans are sanctioned using benchmark rates and regulatory norms, typically up to about 70 per cent of the assessed value. Borrowers must repay the principal along with interest within a fixed tenure. Delays increase the outstanding amount as interest continues to accumulate, banking officials said. If repayment deadlines are missed, banks issue notices and may auction the pledged gold to recover dues. In recent years, an informal layer of intermediaries has emerged in this space. These agents, who are not regulated like banks or NBFCs, approach borrowers facing auction and offer to clear the outstanding loan directly with the bank. Once the loan is settled, the gold is released to the intermediary.
The borrower receives the difference between the current market value and the loan amount, after deductions. For instance, if the market value of gold is Rs 1,50,000 and the outstanding loan is Rs 70,000, the borrower may agree with the intermediary to value the gold at Rs 1,00,000. The agent clears the Rs 70,000 loan, retrieves the pledged gold, and pays the borrower Rs 30,000 as the balance.
Rajeev (name changed), a gold loan settlement agent, said the process begins by checking the day’s gold rate. “If there is enough margin after clearing the bank dues, we settle the loan, collect the gold from the bank, and pay the agreed balance amount to the borrower,” he said.
According to him, many borrowers prefer this option to avoid auction proceedings and to obtain immediate cash. However, once such a transaction is completed, ownership of the jewellery permanently shifts away from the family.
Banks and gold loan companies, meanwhile, maintain that repayment levels remain strong.
George Alexander Muthoot, MD of Muthoot Finance, said more than 97 per cent of customers repay their loans and reclaim their pledged gold. He added that gold jewellery in India carries deep emotional and cultural significance, which motivates families to prioritise repayment. “In some cases, repayments may be facilitated by extended family members or associates,” he said, reflecting changing household cash-flow patterns rather than distress. Despite this, cases like Mariamma’s highlight the vulnerability of borrowers with irregular incomes or limited financial awareness.
In Kerala, where gold functions as both household savings and social security, rising prices present a paradox. While the value of pledged jewellery has increased sharply, the cost of reclaiming it has also risen, widening the gap between borrowers’ repayment capacity and loan liabilities.
In cities such as Kochi, intermediaries offering gold loan settlements have mushroomed in recent years, with posters and agents actively targeting borrowers near banks and commercial centres. Operating in a loosely regulated space, they offer quick settlements and immediate cash, often valuing jewellery significantly below prevailing market prices.
For borrowers under financial stress, these offers provide a way to avoid auction and access urgent funds. However, such transactions often result in the permanent loss of family assets accumulated over generations. As gold prices continue to climb, intermediaries — most of whom lack regulatory approval — are increasingly positioned to benefit from the widening gap between outstanding loan amounts and market value. Caught between mounting interest, the threat of auction, and immediate financial pressures, many borrowers are left with few choices — and often end up losing both their gold and its full value.