Net portfolio growth in loans against gold jewelery segment surpassed ₹1 lakh crore for the first time in half a financial year in H1FY2026 | Photo credit: Deepak Sethi
Retail gold loans are shining brightly in banks’ overall loan portfolio thanks to the rise in gold prices, shift in demand towards unsecured loans and borrower-friendly regulations.
This is underlined by the fact that their net portfolio growth in the loans against gold jewelery (LAGJ) segment (personal loans category) crossed the ₹1 lakh crore mark for the first time in half a financial year in H1FY2026.
Banks’ LAGJ portfolio has increased by around 51 per cent (or ₹1,07,307 crore) in the first half (April-September) of FY26. This portfolio has increased by around 43 per cent (or ₹44,519 crore) in the first half of FY2025.
Their LAGJ portfolio had expanded by ₹61,654 crore in the second half (H2: October-March) of FY2025.
Considering the rising trend in gold prices, borrowers can get more loans for a certain amount of gold that they have pledged with the lenders.
Yellow metal prices rise 29%
The price of the yellow metal (of 995 fineness) rose around 29 per cent to ₹1,14,887 per 10 gram at end-September 2025, from ₹88,807 on March 28, 2025 (the last trading day in FY25), according to IBJA data.
Going by the above pricing and at a loan-to-value ratio (LTV: loan amount to the value of pledged collateral) of 75 percent, a borrower could get ₹86,165 as loan (as on September 30, 2025) against the promise of 10 grams of gold, as against ₹66,605 on March 28, 2025.
Canara Bank MD & CEO K Satyanarayana Raju attributed the growth in banks’ gold loans to the comfort of regulatory reforms.
This includes a higher LTV of 85 per cent (as against 75 per cent prevailing before the RBI issued instructions on loans against gold and silver collateral on June 6, 2025), banks are allowed to lend against voluntary pledging of gold and silver by borrowers in case of agricultural loans up to the free collateral limit (Rs 2 lakh), and extensions of loans are allowed on payment of accrued interest.
In a recent analyst call, Raju said his bank’s gold loan portfolio (including retail and agriculture) rose from about ₹1.95 lakh crore at end-June 2025 to about ₹2.11 lakh crore at end-September 2025. Within this period, the retail portfolio grew from about ₹55,000 crore to about ₹63,000 crore.
BK Divakara, Executive Director of CSB Bank, noted that gold loans are safe as credit risk is mitigated to a large extent.
“As the pledged collateral is highly liquid collateral, as such, there will not be any credit loss. The return on gold loans is also relatively better compared to other retail advances,” he said.
ICRA has forecast that the organized gold loan (GL) market (including banks and NBFCs) will touch the ₹15 lakh crore mark in the current financial year (from ₹11.8 lakh crore as of March 2025), a year earlier than earlier expected.
The rating agency noted that the steady upward trend in gold prices, hitting new highs, is the main reason behind the stronger-than-expected expansion. Subsequently, the GL size is now estimated to rise to ₹18 lakh crore by FY27.
AM Karthik, Senior Vice-President and Co-Group Head Financial Sector Ratings, ICRA, said the organized GL market will grow due to higher gold prices and lower growth in unsecured loan products.
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Published on November 2, 2025
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