Indian households view gold as a store of wealth that is purchased and then left untouched in bank lockers and safes for years. While the metal may appreciate in value over time, it does not generate any direct return for the owner. In many cases, gold jewellery is passed across generations and rarely sold, meaning the value remains largely locked unless it is pledged or sold.
Gold leasing offers an alternative by allowing owners to lend their gold for a specified period in exchange for a return. The arrangement allows you to put your gold assets sitting idle in some locker to productive use while the ownership does not change hands. Here’s a look at how gold leasing works and the risks investors should understand before considering it.
How does gold leasing work?
Gold leasing is a process that lets you lend your gold to jewelers who need it for making jewelry. You still own the gold, but they pay you interest in gold gram (usually 2–7% per year), according to two experts who spoke to Mint. The interest rate differs but the average interest rate is the same as mentioned above.
Here payment in gold gram means that you would not get cash as a return, but instead you would received additional gold.
Some banks also offer gold leasing under the RBI’s Gold Monetization Scheme, according to Alay Razvi, Managing Partner at Accord Juris.
At the end of the lease, the jewelers return the same amount of gold. The process is simple: deposit your gold on a fintech platform, it matches you with verified jewelers, and you earn gold grams as interest monthly or quarterly.
The same provision also applies to digital gold, meaning you can lease your digital gold holdings, Razvi, said.
However, Diviay Chadha, Partner at Singhania & Co. cautioned that digital gold remains unregulated in India, and investor protection mechanisms under securities market purview are not available for it, making digital gold leasing legally unsupported and practically unavailable through regulated channels.
Is gold leasing covered by insurance
According to Razvi, gold leasing is not covered by government insurance like bank deposits (DICGC), adding that some platforms claim to have private insurance, citing Lloyd’s of London as an example, but this is not guaranteed and varies by provider, he noted.
“Private digital gold leasing is not regulated by RBI or SEBI. SEBI has warned that digital gold is not classified as a security or commodity derivative, so there is no investor protection. Only the bank-based Gold Monetization Scheme is RBI-regulated,” the expert said.
Hence, the key point is that if the platform or jeweler defaults, the owner will have no government safety net or recourse.
What owners must know before considering gold leasing?
Gold leasing lets owners earn a yield a return on idle holdings without selling the asset, while borrowers avoid cash loans and price-swing risks, meaning its a win for both sides, Chadha noted.
Adding to that point, Razvi said that the owner also gets interest in gold grams, so if gold prices rise, you gain more value. Your idle gold becomes passive income. However there are some risks associated with this provision and owners must take a note of it before considering gold leasing.
Both experts noted some key risks, which are as follows:
- Counterparty default: There may be cases where the borrower fails to return your gold. There is no regulatory protection if something goes wrong.
- Market risk: Returns are in grams and not in cash, so falling gold prices will lower your INR value of the asset.
- Liquidity risk: Gold will be locked during the lease term so if you require urgent cash, you won’t be able to sell it immediately.
- Platform risk: If the company facilitating gold leasing becomes insolvent or faces financial distress, investors may face delays in recovering their gold, and in extreme cases, their holdings could become tied up in legal or insolvency proceedings.
“Before proceeding, owners must verify that the leasing arrangement maintains clear legal title with the owner throughout, the gold is covered by comprehensive insurance, and independent third-party audits are conducted — as some “leasing” arrangements by bullion banks actually involve selling the leased gold while promising repayment later, creating serious ownership and credit exposure,” Chadha said.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
About the Author
Eshita Gain is a digital journalist at Mint, where she joined in May 2025. She writes on corporate developments, personal finance, markets, and business trends, with a focus on delivering timely and relevant stories to a broad audience.
While her core beat lies in business and finance, she is not confined to a single niche and frequently explores stories across domains, including international relations and policy developments.
She holds a postgraduate diploma in business and financial journalism by Bloomberg from the Asian College of Journalism (ACJ), Chennai. During her time there, she received rigorous training in tracking financial data, interpreting corporate filings, and reporting on business developments. She has pursued her graduation from St. Joseph’s University, Bengaluru in a multi-disciplinary course. Her majors included Journalism, International Relations, peace and conflict studies.
Eshita has previously worked in digital marketing, which enables her to write SEO friendly copies that are clear and engaging.
Her primary interest lies in breaking down complex subjects and writing clear, accessible copies that inform readers. She aims to bridge the gap between technical financial language and everyday understanding.
Outside the newsroom, Eshita enjoys reading non-fiction, and exploring new places, constantly seeking fresh perspectives and stories beyond headlines.
