Key Takeaways:
- Gold loans in India have grown nearly fourfold over three years, driven by higher gold prices and larger ticket sizes.
- More than 60% of new retail loan originations come from semi-urban and rural areas where gold is widely accepted as collateral.
- Lenders across banks, SFBs, NBFCs and fintechs are prioritising secured lending and asset quality, with gold loans offering lower credit costs and rapid disbursement.
- RBI data shows loans against gold jewellery rose 128.5% year-on-year to Rs 3.38 lakh crore in October 2025, signalling a shift in borrowing preferences.
Gold loans in India have emerged as a standout segment in the retail credit mix, expanding rapidly as lenders and borrowers favour secured products amid tighter underwriting standards. Industry participants and regulators noted at the Antique Stock Broking BFSI Conference 2025 that gold-backed lending has scaled nearly fourfold in the past three years, supported by rising bullion prices, larger average ticket sizes and sustained demand in semi-urban and rural markets.
Gold loans in India: rapid rise and why it matters
Reserve Bank of India data underlines the trend. Loans against gold jewellery recorded triple-digit growth from February 2025 and outstanding balances surged 128.5% year-on-year to Rs 3.38 lakh crore in October 2025. While gold loans still represent a modest share of total non-food credit, their proportion has almost doubled over the past year, indicating a notable change in borrower behaviour.
Several factors explain the ascent. In semi-urban and rural areas, where more than 60% of new retail loan originations now originate, gold remains a culturally accepted and liquid form of collateral. Borrowers favour gold loans over unsecured credit because they typically deliver faster disbursement, more flexible repayment options and lower effective interest rates. For lenders, gold loans offer lower credit costs, faster churn and strong cross-sell opportunities, making them an attractive growth lever as balance-sheet expansion becomes more cautious.
Conference speakers reported that banks and small finance banks plan to deepen gold loan distribution across branch networks in the next two years, positioning the product as a stabiliser for retail portfolios. Non-banking financial companies and fintechs have also been recalibrating strategies to prioritise secured lending, profitability and asset quality over aggressive growth. Microfinance institutions are increasingly evaluating secured products such as gold loans and loans against property as microfinance growth faces structural constraints.
That said, the segment is not without risks. Delinquencies tend to be structurally higher in semi-urban and rural markets, which necessitates sharper pricing and disciplined underwriting. Lenders said they will need stronger collections practices and more conservative loan-to-value ratios in these regions to contain credit costs. Nonetheless, the secured nature of gold loans gives institutions a clearer recovery route compared with unsecured retail exposures.
Regulatory commentary has been supportive of monitoring rapid increases in specific credit categories. The RBI’s State of the Economy report for December 2025 highlighted gold loans as an ‘unlikely star’ of retail credit owing to their outsized growth. Policymakers and supervisors are expected to watch portfolio concentration and underwriting standards closely as the product expands.
Looking ahead, the momentum behind gold loans is likely to continue so long as gold prices remain elevated and rural credit demand stays robust. For lenders, the challenge will be to scale distribution while maintaining underwriting discipline and avoiding concentration risk. For borrowers, gold loans offer a practical secured alternative to unsecured credit, particularly in regions where gold is a traditional store of value.
As the retail lending mix shifts, gold-backed lending may play an increasingly prominent role in stabilising balance sheets and supporting responsible credit growth across India's semi-urban and rural markets.
