Surge in Gold-Backed Loans in India: A Record Growth

Explosive Growth in Gold-Backed Lending

In India, the trend of gold-backed lending is experiencing remarkable growth, with loans secured by gold increasing by 128% compared to the previous year, surpassing the Rs 4 lakh crore mark for the first time. According to data from the Reserve Bank of India (RBI) regarding sectoral credit deployment, gold loans are a significant contributor to the rapid rise in personal loans, which now represent 34.5% of total bank credit—the highest proportion among all categories. This increase has propelled overall bank credit growth to 14.4% as of January 31.

The total outstanding loans secured by gold jewellery reached Rs 4,00,517 crore, indicating that gold loans account for approximately 9% of the incremental bank credit. Between January 2024 and January 2026, the outstanding gold loans surged by nearly Rs 3.1 lakh crore, marking an increase of more than four times within two years.

Two primary factors are driving this surge: a significant 152% increase in gold prices over the last two years and regulatory guidance that mandates banks to categorize jewellery-backed loans explicitly as gold loans. The overall credit landscape reveals a divergence among sectors. While lending to micro, small, and medium enterprises continues to grow steadily, borrowing by large corporations remains relatively low. Within the services sector, loans to non-banking financial companies (NBFCs) are emerging as one of the fastest-growing segments.

As of January 31, 2026, non-food bank credit has grown by 14.4% year-on-year. Since March 2025, the loan portfolio has expanded by approximately 12%, resulting in an incremental growth of around Rs 21.8 lakh crore. The significant increase in gold-backed borrowing underscores how households are increasingly leveraging their gold assets as a vital source of liquidity, positioning gold loans as one of the most rapidly expanding segments in India's credit market.