Banks and financial institutions have disbursed over Rs 60 billion in loans using gold and silver as collateral. The increase in the price of these precious metals has driven a rise in such loans. According to Nepal Rastra Bank, as of mid-August in the current fiscal year, loans secured with gold and silver as collateral amounted to Rs 60.12 billion. This is a 3% increase from the Rs 53.31 billion issued by mid-August last year.

On Monday, the price of gold in the Nepali market stood at Rs 160,500 per tola (11.66 grams), compared to around Rs 100,000 per tola a year ago. As the value of gold rises, loans secured by gold have followed the same trend.

In Nepali society, while gold and silver are primarily used for jewelry, they are also considered savings that can be easily liquidated in times of need. It is common for individuals to purchase gold when they have extra savings and later use it as collateral for loans during financial difficulties. Gold is viewed as a highly secure investment, making it a preferred collateral for banks.

Initially, people used to take loans from the same shops where they purchased gold, but over time, they have increasingly turned to banks and financial institutions for better loan options. Banks provide short-term loans under the consumer category by accepting gold as collateral. The quick and straightforward process, along with lower interest rates compared to other types of loans, has made gold-backed loans popular among the general public.

Unlike real estate loans, which involve lengthy procedures such as property appraisals, loans secured with gold and silver as collateral can be processed quickly. Banks typically offer loans of 50–70% of the market value of the collateral, after assessing its value.