The rise in gold loans is attributed to individual borrowers and MSMEs seeking alternatives to harder-to-secure personal loans, along with clearer bank guidelines on gold loans
Growth rate in gold loans had outpaced credit card and personal loans in 2024 as well | Photo Credit: Deepak Sethi
At a time when overall bank credit growth has been very weak, gold loans have been witnessing a surge in demand.
RBI data shows that outstanding gold loans increased 124 per cent y-o-y in June 2025. In contrast, credit card loans increased only 7 per cent while other personal loans grew 9 per cent over the same period. Growth rate in gold loans had outpaced credit card and personal loans in 2024 as well.
Asset strain
Analysis of asset quality shows that Gross NPAs in gold loans for banks have grown marginally from March 2023 to March 2025, from 0.20 per cent in March 2023 to 0.22 per cent in March 2025, while for Upper and Mid-Layer NBFCs, it has increased from 1.21 per cent to 2.14 per cent over the same period.
Experts say that, besides a rise in gold prices, growth in gold loans has been driven by individual borrowers and MSMEs opting for gold loans as other personal loans have become harder to secure. It is also due to clarity in gold loan guidelines encouraging banks to accelerate focus on the product, which had been hitherto more common for NBFCs, they add.
“The growth of gold loans by banks is driven by the semi-urban/urban individuals and MSMEs. These borrowers have seen a bit of stress in recent times with over-leveraging and top-up unsecured personal or business loans being harder to get. However, the asset quality on these loans has been fairly stable for banks,” Jinay Gala, Director, India Ratings & Research, said.
Deepak Abbot, co-founder of gold loan tech platform Indiagold, said that the rise of gold loans should not be seen just as a sign of stress. Banks have ramped up their distribution network for gold loans amid the tightening of other unsecured personal loans and the recent gold loan regulations have also given them clarity to extend better schemes, he added.
Vivek Iyer, Partner and Financial Services Risk Leader, Grant Thornton Bharat, said gold is the most easily available collateral in India, and owing to rising prices, the NPAs on the gold loan business also tend to be lower than other personal loans.
Published on September 11, 2025
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