Kochi: With gold prices soaring, the number of people turning to gold loans for financial assistance has sharply increased. According to Reserve Bank data, gold loans rose by 122% up to June 2025. However, not all borrowers are able to fully repay their loans and reclaim their pledged ornaments. As a result, many are losing their gold, creating new business opportunities in the sale of pledged gold.

Most of the buyers of such gold operate under the registration of pawn brokers, while some also hold local trade licenses. These buyers settle the overdue loan amounts in a lump sum and purchase the pledged gold directly from banks or lending institutions. Although the original borrowers lose their valuable ornaments, they are relieved from the burden of accumulating interest. After deducting the repayment amount and related charges, the remaining balance is returned to the customer. Additionally, processing fees and GST are applied. The valuation is calculated based on the market price of gold on the day the loan transaction was initiated.

Fraud on the rise – AKGSMA warns
The All Kerala Gold and Silver Merchants Association (AKGSMA) has raised alarm over rising fraud in the name of gold recovery services. It cautioned customers against illegal operators who lure victims by promising to release pledged gold or purchase old ornaments. These fraudsters often post advertisements displaying only a phone number, without any registered business address or GST credentials and vanish after duping customers.

According to the association, such rackets are frequently run by fraudsters and criminal groups from outside the state. Its state committee has urged the government to take strict action against those who illegally acquire old gold and conduct unauthorised trade in new ornaments. The association also reminded that it is unlawful for gold loan companies and private banks to engage in buying or selling pledged gold.