In a significant shift within India’s financial sector, gold loans have quietly transformed from a traditional backup into one of the most resilient and fastest-growing segments of the credit market. According to a report based on expert insights from the Antique Stock Broking BFSI Conference 2025, the gold loan segment has scaled nearly four-fold over the past three years.
The Reserve Bank of India’s (RBI) State of the Economy report for December 2025 underscores this explosive growth. Data reveals that loans against gold jewellery have been recording triple-digit growth rates since February 2025, far outstripping overall credit expansion.
By October 2025, outstanding balances in this category surged by a staggering 128.5% year-on-year, reaching a total of ₹3.38 lakh crore. While gold loans still represent a relatively small portion of total non-food credit, their share has nearly doubled in the last year alone, signaling a profound change in borrower behavior.
Rural and Semi-Urban Demand
The report highlights that over 60% of new retail loan originations are now coming from semi-urban and rural regions. In these markets, gold is not just an ornament but a culturally accepted and highly liquid form of collateral.
Borrowers in these areas increasingly prefer gold loans over unsecured credit due to:
Faster Disbursement: Immediate liquidity without lengthy paperwork.
Lower Interest Rates: More affordable compared to unsecured personal loans.
Flexible Repayment: Options that suit the seasonal income cycles of rural households.
Strategic Shift by Lenders
Amidst tightening underwriting discipline across the banking system, gold loans have become an “attractive growth lever” for financial institutions.
Banks and SFBs: Several Small Finance Banks (SFBs) and commercial banks plan to deepen their gold loan distribution through their branch networks over the next two years, viewing the product as a “balance-sheet stabilizer.”
Microfinance Institutions (MFIs): Facing structural constraints in pure-play microfinance, MFIs are pivoting toward secured products like gold loans and Loans Against Property (LAP).
Asset Quality Focus: Lenders across the board—banks, NBFCs, and fintechs—are recalibrating strategies to prioritize asset quality and profitability over aggressive balance-sheet expansion.
Market Dynamics and Outlook
Experts attribute this 4x scale-up to a combination of rising gold prices (which increases the loan-to-value ratio), higher average ticket sizes, and sustained demand.
Despite structurally higher delinquencies in rural regions, the industry is managing risks through sharper pricing and disciplined underwriting. While corporate credit and unsecured retail segments remain subdued, the “gold rush” in the lending space is expected to continue as institutions look for low-credit-cost products with fast churn and strong cross-selling opportunities.
