Gold loans have significantly expanded in India, showing a 128.5% increase year-on-year as of October 2025. As per the Reserve Bank of India’s report, the growth has been driven by high gold prices and growing demand for collateral-backed credit amid tighter lending norms.
The Reserve Bank of India reported that outstanding gold loans rose from levels recorded in February 2025 to ₹3,38,000 crore by October 2025, marking a jump of 128.5%.
This level of growth has notably outpaced the overall increase in total retail bank credit during the same period. Gold loans accounted for a larger share of retail lending compared to the previous year, showing a rapid shift in borrower preference.
The increase in gold loans is largely attributed to elevated gold prices and tighter scrutiny in the unsecured loans market. Many borrowers have shifted towards secured credit options as banks and NBFCs raised interest rates or tightened approvals on personal and unsecured loans.
The secured nature of gold loans offers quicker disbursements and relatively lower credit risks for lenders.
Read More: Gold Price Hit-All Time on December 22 on Rate Cut by US Fed: World Gold Council Expects a Suprise in 2026!
The expansion of gold-backed lending is more visible in Tier-II and Tier-III cities, where household gold holdings are higher. Improved access to banking services and financial inclusion efforts have also played a role in driving credit demand in these regions.
Traditional gold holdings are increasingly being monetised to meet liquidity requirements for personal, business, and agricultural needs.
While banks reported more than 120% year-on-year growth in gold loans between February and August 2025, non-banking financial companies also saw an increase in their gold loan portfolios. This trend indicates broader traction across formal lending institutions.
Gold loans have emerged as a prominent segment within retail credit in India, recording sharp growth due to the combination of high collateral value and borrower demand for secured credit under cautious lending norms. The growth, while steep, is supported by tangible assets and has found acceptance across household and entrepreneurial segments.
Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Dec 23, 2025, 2:49 PM IST
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