Gold Loans Rising Fast in India’s Banking System
Gold has always been a silent financial partner in Indian households. In difficult times, families rarely sell it. Instead, they pledge it for quick liquidity.
Now banks are seeing that story play out at scale.
Over the past year, gold loans in banks’ retail portfolios doubled from 3% to 6%. The main driver is the sharp rise in gold prices. When gold prices increase, the value of pledged jewellery also increases. This allows borrowers to access larger loan amounts against the same gold.
For banks, gold loans are attractive. They are secured loans, meaning risk is lower because gold acts as collateral. The loan approval process is also faster compared to personal loans or business loans.
At the same time, the broader credit environment shows interesting shifts.
Retail credit grew 14.9% in January, but credit card growth slowed to only 1.5%, showing consumers may be becoming more cautious about unsecured borrowing.
Another strong pillar remains MSME lending, which continues supporting overall bank credit growth of 14.6%.
This trend highlights something important about India’s financial behaviour. Even in a modern banking system, traditional assets like gold still play a major role in liquidity and credit access.
As gold prices remain high, banks and NBFCs focused on gold loans may continue seeing strong demand.
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