Businesswoman counting money, calculating the conversion rate of Indian Rupee money as a return of financial investment at the table in her office indoors.
| Photo Credit:
iStockphoto
With the price of gold reaching all-time highs, banks are seeing a huge surge in demand for gold loans.
According to data from RBI, outstanding loans against gold jewellery for scheduled commercial banks (SCBs) stood at ₹3.58 lakh crore as of November 2025, an increase of 125 per cent year-on-year.
In contrast, credit card loans increased only 2.4 per cent, while other personal loans grew 9 per cent over the same period.
Speaking to businessline, experts suggest that given the global slowdown, growth is expected to be driven domestically and banks are hence looking at gold loans to meet credit demand.
“Banks have been looking to rebalance their portfolios between secured and unsecured lending and gold loans serve to achieve this. As a result, more banks are entering this segment, which has been traditionally dominated by more NBFCs,” said Vivek Iyer, Partner and Financial Services Risk Advisory Services, Grant Thornton Bharat.
Ongoing process
Moreover, Iyer explained that the increase in gold prices directly expands the lending capacity for banks. As the value of the pledged gold increases, banks are able to sanction higher loan amounts for the same quantity of gold while being within RBI’s prescribed loan-to-value (LTV) limits. “The increase in the underlying collateral value has led to higher disbursements though the LTV ratio has remained stable, “ he said.
Aparna Kirubakaran, Director, Crisil Ratings believes that the increase can also be attributed to the slowdowns in other retail segments such as personal loans. She adds that with the current trend of surge in gold prices and increasing demand from borrowers, banks have already been increasing their focus in this segment over the last 1-2 years.
Market share of banks in gold loans could be around 55 per cent, as per industry estimates.
In terms of asset quality, Gross Non Performing Assets (GNPA) for gold loans stood at 0.8 per cent for September 2025, as per RBI.
Status factor
From a consumer perspective, Iyer suggests that gold is a sentimental asset class and hence when people borrow against gold, the intent is to usually pay it back out of the fear of losing it. This ensures that repayment patterns are strong, making it a good viable product for the lenders.
The increase in demand can also be observed in terms of the total assets under management for major gold non-banking financial companies (NBFCs).
Muthoot Finance, India’s largest gold loan NBFC, saw its gold AUM go up 47 per cent to ₹13.2 lakh crore in the quarter ending September 2025, as against ₹9 lakh crore in the same quarter last financial year.
Manappuram Finance saw its AUM go up by 29 per cent to ₹31,505 crore (₹24,365), while for IIFL Finance it went up by more than 3x to ₹34,577 crore.
Published on January 26, 2026
