Rapid expansion has made gold loans the second-largest retail credit segment, but rising borrower leverage and repeat borrowing patterns are prompting calls for tighter regulatory oversight
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TransUnion CIBIL report also points to the fact that the average outstanding amount per borrower rose from ₹1.9 lakh in December 2022 to ₹3.1 lakh in December 2025
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India’s gold loan market has expanded nearly fourfold since March 2022, becoming the second-largest retail credit product after home loans, but stress in the form of borrower leverage and repeat borrowing has prompted analysts to call for greater regulatory scrutiny.
Overall delinquency was 1.1 per cent for gold loans originating in the six months ended June 2025, according to a report by TransUnion Cibil. (Delinquency is measured as any trade reported as 60 days past due within six months of origination).
Borrowers with outstanding loans of more than Rs 2.5 lakh saw delinquency of 1.5 per cent, compared to 0.7 per cent for those with lower exposure. Those with five loans had a delinquency of 1.9 per cent.
Borrowers with a history of “serious delinquency” are highly likely to disengage from the formal credit system after taking a gold loan. Their credit-access closure rate was around 1.6 times higher than that of non-defaulting borrowers, suggesting that gold loans may be the “product of last resort” for stressed borrowers.
Suresh Ganapathy, of Macquarie Research, noted that delinquency rates are higher for larger-ticket loans and among borrowers with several active loans. “Vintage delinquency” has also increased for loans between Rs 50,000 and Rs 2 lakh. Stress is building up but overall delinquency rates are low, he said.
“We expect the Reserve Bank of India to be more watchful regarding gold loans. While there has been a spate of regulatory changes, if growth continues at such a rapid pace, there could be a fresh round of restrictions in our view,” said Macquarie Research in a report. It noted that while portfolio at risk levels are comfortable and losses from gold loan defaults will be lower than those from personal loans, “we will remain watchful of any sharp correction in gold prices, which could impact both growth and recovery potential”.
According to TransUnion Cibil’s report, the average outstanding amount per gold loan borrower rose from Rs 1.9 lakh in December 2022 to Rs 3.1 lakh in December 2025. The share of borrowers with gold loan exposure above Rs 2.5 lakh increased from 10 per cent in 2022 to 14 per cent in 2025.
“Borrowers with higher existing balances and greater unsecured exposure have also become more prominent at origination, indicating that gold loans are increasingly sitting alongside other forms of credit in borrower wallets,” the Cibil report said.
Gold loans have grown at a compound annual growth rate of over 30 per cent in the past few years, more than twice the pace of personal loans. Gold loans comprised 11.1 per cent of India’s retail credit portfolio in December 2025.
“Much of this growth is explained by higher gold prices, which have doubled over the past couple of years,” the Macquarie report said.
According to TransUnion Cibil, gold loan growth is driven by increased adoption, larger loan sizes, and a borrower base with deeper credit histories, including more women. Non-banking financial companies increased their share in gold loan balances from 7 per cent in March 2022 to 11 per cent in December 2025. Public-sector banks increased from 57 per cent to 62 per cent.
“Is the retail [segment] under pressure due to rising over-leverage, and therefore pledging gold for various consumption requirements? Are income levels being affected and thus impacting consumption ability? Are some of these gold loans being used for stock market investments or speculation? Is the retail segment being opportunistic and cashing in on rising gold prices? We believe it is a combination of all of the above,” the Macquarie report said.
“As the gold loan segment expands, lenders’ priority must be to balance growth with prudence,” said Bhavesh Jain, managing director and chief executive officer of TransUnion Cibil.
“Collateral strength remains important, but it cannot be the sole criterion for evaluating borrowers. Lenders will need to assess total borrower indebtedness, repayment capacity, recent credit behaviour and cross-lender exposure more holistically. Stronger borrower-level loan-to-value checks, risk-based pricing, and closer monitoring of repeat reliance on gold loans will be essential to ensure that this important segment continues to grow in a sustainable and responsible way,” he said.
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