Gold Loans Surge as Lenders Offer Easy Credit in a Tough Market

Strategic Insights -

As gold prices soar, lenders in India are shovelling out gold loans to customers, even as personal loans and credit cards become harder to come by. According to Reserve Bank of India (RBI) data, lenders handed out more gold loans than any other type of retail loan, including home loans, in the fiscal year 2026. The momentum is expected to pick up further after banks were recently allowed to lend more against the precious metal.

Key Takeaways:

  • Lenders handed out more gold loans than any other type of retail loan, including home loans, in FY26, with Rs.85,432 crore in gold loans compared to Rs.70,675 crore in home loans.
  • Gold prices have risen 23% this fiscal year to touch Rs.109,390 per 10 grams, making it more attractive for borrowers to take out loans against gold.
  • The growth in gold loans is driven by both higher gold prices and the lack of easy alternative avenues for short-term loans, with 40.9% growth since the end of March and 122% over the same period last year.
  • Outstanding gold loans stand at Rs.2.9 lakh crore, a fraction of housing loans which total Rs.30.8 lakh crore.
  • The pace of growth of personal loans, which are not backed by collateral, has slowed after multiple RBI warnings, with a 2023 directive making it more expensive for banks to make these loans.
  • About 60-70% of the gold loan book comprises repeat customers, who have borrowed from the lender in the past.
  • Large public sector banks like SBI and BoB have pushed gold loans, heating up competition in the market.
  • RBI's recent circular allowing lenders to lend more against gold is expected to further boost the growth of gold loans.

Statistics:

  • Gold loan disbursal growth: 40.9% since the end of March and 122% over the same period last year.
  • Gold loan disbursals: Rs.85,432 crore in FY26.
  • Housing loan disbursals: Rs.70,675 crore in FY26.
  • Outstanding gold loans: Rs.2.9 lakh crore.
  • Outstanding housing loans: Rs.30.8 lakh crore.
  • Personal loan outstanding: Rs.15.4 lakh crore at the end of July.

Sources:

  • Reserve Bank of India (RBI) data
  • India Ratings and Research
  • MCX data
  • Hindustan Times
  • Icra