Gold Loans Are Becoming A Bigger Part Of Retail Lending: What’s Driving The Shift?

India’s gold-loan market is no longer a niche corner of retail finance. The segment has expanded rapidly as lenders look for secured credit and borrowers increasingly use gold to raise funds without selling the asset. The RBI’s June 2026 Financial Stability Report said gold-backed loans had become the largest segment within non-housing retail borrowing, growing at a 42.4% compounded annual rate since March 2024.

RBI data showed outstanding loans against gold jewellery rose 69.3% year-on-year to ₹3.41 lakh crore in June 2026, after growing 69.9% in May. Overall NBFC retail loans grew 20.3% in June, showing how quickly gold-backed lending is expanding.

Gold Loans Are Growing Faster Than Other Retail Loans

In June, NBFC gold loans grew nearly 70% annually, while overall retail loans grew 20.3%, according to RBI data. The gold-loan portfolio is therefore expanding at more than three times the pace of the broader NBFC retail book.

The trend is equally striking over a longer period. TransUnion CIBIL’s Gold Loan Landscape Report found that gold-loan balances grew 3.8 times between March 2022 and December 2025. Their share of India’s retail-credit portfolio rose from 5.9% to 11.1%, making gold loans the second-largest retail-credit product by balance share after housing loans.

Why Are Lenders Moving Towards Secured Loans?

One reason is the changing environment for unsecured credit. Personal loans and other unsecured products expanded rapidly in recent years, but greater regulatory scrutiny has made secured retail products more attractive to lenders looking for scalable growth with collateral backing.

Gold loans provide a tangible asset against the loan. If the borrower defaults, the gold can be auctioned subject to regulatory requirements and the proceeds used towards recovery. Unlike mortgages, the process does not require property-title verification or lengthy legal checks, which can make gold-backed credit quicker to originate.

Why Gold Loans Fit The Bill

For lenders, the collateral already exists. Indian households hold a large stock of gold that can potentially be monetised without selling the asset. This gives financial institutions access to an established pool of collateral and customers.

The recent moves by large financial groups show how the opportunity is being viewed. The Economic Times (ET) reported that Tata Capital announced plans to acquire an 88.6% stake in Yogakshemam Loans, or Yogloans, while Godrej Capital acquired the gold-loan business of Kanakadurga Finance. Aditya Birla Capital has separately announced plans to build a gold-loan franchise with around 1,000 branches over three years.

These moves also highlight the value of specialised expertise. Gold lending requires trained teams for jewellery appraisal, secure storage, fraud controls and auction processes. Acquisitions can therefore give new entrants access to existing branches, customers and operating know-how.

Gold Prices Are Giving The Segment An Extra Push

Rising gold prices have added another tailwind. When gold becomes more valuable, the same quantity of jewellery can potentially support a larger loan, subject to valuation and regulatory loan-to-value limits. That can increase borrowing capacity and the value of lenders’ outstanding loan books.

But higher prices do not automatically mean borrowers are pledging proportionately more gold. TransUnion CIBIL found that gold-loan origination value rose 5.1 times between Q1 2022 and Q4 2025, while origination volumes grew 2.3 times. Average ticket size more than doubled from ₹90,000 to ₹1.96 lakh.

That distinction matters because the expansion reflects both higher gold values and deeper borrowing. A sharp correction in gold prices could therefore affect the value of collateral supporting these loans, making risk management important.

The Gold Loan Customer Is Changing

TransUnion CIBIL found that the share of prime and above-prime borrowers in gold-loan originations rose from 43% in 2022 to around 52% in 2025. The average outstanding amount per borrower increased from ₹1.9 lakh in December 2022 to ₹3.1 lakh by December 2025.

The data suggests that gold loans are attracting a broader borrower base and are increasingly being used alongside other forms of credit. The rise in average ticket sizes also indicates that the product is moving beyond very small, emergency borrowing needs.

Why This Is No Longer Just A Muthoot-Manappuram Business

For years, gold lending was closely associated with specialist players such as Muthoot Finance and Manappuram Finance. Banks have since expanded their presence, and diversified financial groups are now joining the competition.

ET reported that Tata Capital and Godrej Capital entered the segment through acquisitions, while Aditya Birla Capital has chosen a branch-led strategy. Their entry suggests gold loans are no longer a niche product.

For diversified lenders, the attraction lies in combining secured collateral with a scalable retail product.

Is This A Long-Term Shift Or A Gold-Price-Led Boom?

There is clearly a gold-price component to the current expansion. Higher prices raise collateral values and can increase the amount borrowers are eligible to raise. A sharp correction could therefore slow growth in loan values and test lenders’ risk controls.

But the broader data suggests that the story is not only about gold prices. Gold-loan balances have grown 3.8 times since March 2022, origination volumes have more than doubled and average ticket sizes have risen substantially, according to TransUnion CIBIL. The entry of banks and large financial groups adds another sign that the business is becoming structurally more important.

The bigger shift, therefore, is in the role gold loans play in retail finance. What was once largely a specialist lending product is increasingly becoming a mainstream secured-credit category. High gold prices may have accelerated the trend, but the widening borrower base and growing lender participation suggest the segment could remain important even as the gold-price cycle changes.