Businesswoman counting money, calculating the exchange rate of Indian rupee money as return on financial investment at the table in her office indoors. | Photo credit: iStockphoto
According to RBI data, outstanding loans against gold jewelery for scheduled commercial banks (SCBs) stood at ₹3.58 lakh crore as of November 2025, up 125 per cent year-on-year.
In contrast, credit card loans only rose 2.4 percent, while other personal loans grew 9 percent over the same period.
Speak with business lineExperts suggest that given the global slowdown, growth is expected to be boosted domestically and banks are therefore looking at gold loans to meet credit demand.
“Banks have been trying to rebalance their portfolios between secured and unsecured loans and gold loans serve to achieve this. As a result, more and more banks are entering this segment, which has traditionally been dominated by more NBFCs,” said Vivek Iyer, Partner and Financial Services Risk Advisory Services, Grant Thornton Bharat.
Ongoing process
Moreover, Iyer explained that the rise in gold prices directly increases the lending capacity for banks. As the value of the mortgaged gold increases, banks can sanction higher loan amounts for the same amount of gold, while staying within the loan-to-value (LTV) limits prescribed by the RBI. “The increase in the value of the underlying collateral has led to higher payouts, although the LTV ratio has remained stable,” he said.
Aparna Kirubakaran, director, Crisil Ratings, believes the increase can also be attributed to the slowdown in other retail segments such as personal loans. She adds that with the current trend of rising gold prices and increasing demand from borrowers, banks have already increased their focus on this segment over the past 1-2 years.
The banks’ market share in gold loans could be around 55 percent, according to industry estimates.
In terms of asset quality, the gross non-performing assets (GNPA) for gold loans stood at 0.8 per cent in September 2025, according to the RBI.
Status factor
From a consumer perspective, Iyer suggests that gold is a sentimental asset class and that when people borrow against gold, the intention is usually to pay it back for fear of losing it. This ensures that repayment patterns are strong, making it a viable product for lenders.
The increase in demand can also be observed in terms of total assets under management of large gold non-banking financial companies (NBFCs).
Muthoot Finance, India’s largest gold loan NBFC, saw its gold AUM rise 47 per cent to ₹13.2 lakh crore in the quarter ended September 2025, against ₹9 lakh crore in the same quarter last fiscal.
Manappuram Finance saw its assets under management rise 29 per cent to ₹31,505 crore (₹24,365), while for IIFL Finance it rose more than three times to ₹34,577 crore.
Published on January 26, 2026
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