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Gold loans have emerged as one of the fastest-growing segments of retail credit in India, with outstanding loans against gold jewellery recording triple-digit growth since February 2025, far outpacing overall bank credit expansion, according to the Reserve Bank of India’s State of the Economy report for December 2025.
RBI data show that loans against gold jewellery rose 128.5% year-on-year to ₹3.38 lakh crore in October 2025.
While gold loans still account for a relatively small share of total non-food credit, their proportion has nearly doubled over the past year, signalling a sharp shift in borrowing patterns.
The central bank attributed the surge to a combination of elevated gold prices, tighter conditions in unsecured lending, and rising demand for quick, collateral-backed liquidity.
According to the RBI, outstanding gold loans from banks grew by over 120% year-on-year between February and August 2025, with non-banking financial companies (NBFCs) also reporting strong expansion in gold-backed loan books.
The growth in gold loans stands in contrast to the relatively moderate pace of overall retail credit growth during the same period.
Market participants note that borrowers are favouring secured credit products such as gold loans over unsecured personal loans, particularly amid macroeconomic uncertainty and higher interest rates on non-collateralised borrowing.
The trend appears more pronounced in Tier-II and Tier-III cities, where formal credit penetration has improved and household gold ownership remains high.
“Loans against gold jewellery have become a preferred option for borrowers seeking fast and flexible access to funds with lower underwriting risk,” said Mukesh Pandey, Director at Rupyaa Paisa, citing the RBI’s data.
He added that rising gold prices have strengthened the attractiveness of gold as collateral for both households and small businesses.
The RBI report also flagged the need for close monitoring of rapid growth pockets within retail credit, even as it acknowledged that gold loans are backed by tangible collateral and typically carry lower credit risk than unsecured products.
Industry executives expect gold-backed lending to remain resilient into 2026, supported by sustained demand from households and micro-entrepreneurs, deeper financial inclusion, and continued formalisation of credit channels. However, analysts caution that the pace of growth may moderate if gold prices stabilise or if broader credit conditions ease.
-With agencies inputs
RBI data show that loans against gold jewellery rose 128.5% year-on-year to ₹3.38 lakh crore in October 2025.
While gold loans still account for a relatively small share of total non-food credit, their proportion has nearly doubled over the past year, signalling a sharp shift in borrowing patterns.
The central bank attributed the surge to a combination of elevated gold prices, tighter conditions in unsecured lending, and rising demand for quick, collateral-backed liquidity.
According to the RBI, outstanding gold loans from banks grew by over 120% year-on-year between February and August 2025, with non-banking financial companies (NBFCs) also reporting strong expansion in gold-backed loan books.
The growth in gold loans stands in contrast to the relatively moderate pace of overall retail credit growth during the same period.
Market participants note that borrowers are favouring secured credit products such as gold loans over unsecured personal loans, particularly amid macroeconomic uncertainty and higher interest rates on non-collateralised borrowing.
The trend appears more pronounced in Tier-II and Tier-III cities, where formal credit penetration has improved and household gold ownership remains high.
“Loans against gold jewellery have become a preferred option for borrowers seeking fast and flexible access to funds with lower underwriting risk,” said Mukesh Pandey, Director at Rupyaa Paisa, citing the RBI’s data.
He added that rising gold prices have strengthened the attractiveness of gold as collateral for both households and small businesses.
The RBI report also flagged the need for close monitoring of rapid growth pockets within retail credit, even as it acknowledged that gold loans are backed by tangible collateral and typically carry lower credit risk than unsecured products.
Industry executives expect gold-backed lending to remain resilient into 2026, supported by sustained demand from households and micro-entrepreneurs, deeper financial inclusion, and continued formalisation of credit channels. However, analysts caution that the pace of growth may moderate if gold prices stabilise or if broader credit conditions ease.
-With agencies inputs
