Loans Against Gold Jewellery Hit All-Time High of ₹2.94 Lakh Crore in August 2025

India’s gold loan sector witnessed unprecedented growth in August 2025, with the total value of loans against pledged gold jewellery reaching ₹2.94 lakh crore. This marks the 15th consecutive monthly record, largely fuelled by soaring gold prices that have surged 53% in the past year.

Record-Breaking Growth in Gold Loans Amid Gold Price Rally

The gold loan book has expanded significantly, rising from ₹1.02 lakh crore in April 2024 to ₹2.94 lakh crore in August 2025. Every month since March 2025 has witnessed year-on-year growth exceeding 100%. The surge is primarily attributed to the 40% to 45% increase in gold prices, with MCX spot gold recently hitting a record ₹1,09,013 per 10 grams.

Driving Factors Behind Soaring Demand

The high loan-to-value (LTV) ratio of gold loans, coupled with the simplicity and speed of processing, is drawing more borrowers amid tighter credit in microfinance and unsecured segments. Additionally, repayment behaviour in this segment has remained consistently strong, making gold loans an attractive proposition for lenders.

Regulatory Boost to Gold Lending

In a bid to improve formal credit access, especially for small borrowers, the Reserve Bank of India has revised LTV ratios: up to 85% for loans up to ₹2.5 lakh, 80% for loans between ₹2.5 lakh and ₹5 lakh, while continuing with 75% for loans above ₹5 lakh. These changes take effect from April 1, 2026, and are expected to set a common regulatory ground for banks and NBFCs.

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Gold Loan Outlook Remains Positive

With continued stress in unsecured loans and microfinance, gold-backed lending is expected to grow at 1.2 to 1.5 times the nominal GDP. For FY26, the estimated gold loan growth from NBFCs stands at close to 20%, after an exceptional 31% expansion in FY25.

Conclusion

The ongoing surge in gold prices and regulatory enhancements are powering a robust growth curve in India’s gold loan market. With monthly records being set continuously and a favourable repayment climate, gold loans are fast becoming the preferred option for both borrowers and lenders.

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