Gold Loan Growth Jumps To 84 Per Cent In FY26 As Rising Prices Boost Borrowing: Report

Gold loans have emerged as one of the fastest-growing segments in retail lending, with year-on-year growth in sourcing value rising to 84 per cent in FY26 from 69 per cent in FY25, according to Experian's report, Gold Loans in Transition: Market Evolution & Consumer Patterns.

Gold loans are gaining a larger share of the retail credit market as borrowers increasingly use gold-backed financing to meet short-term funding needs, stated the report. Gold loans accounted for 41 per cent of overall retail credit sourcing in FY26, up from 30 per cent in FY25 and 20 per cent in FY24.

Higher Price Creates Higher Demand

The report has attributed the rising price of gold as one of the major drivers behind the inflated demand among borrowers.

As the value of pledged gold hiked, borrowers became eligible for bigger loan amounts against the same collateral. Experian's analysis showed that while the gold price index rose 144 per cent from its March 2024 base, the gold loan sanction amount index also climbed 200 per cent over the same period.

The report also noted that gold loan growth is now being driven more by higher loan values than by an increase in the number of borrowers.

Average ticket sizes nearly doubled from Rs 0.98 lakh in FY23 to Rs 1.96 lakh in FY26. This trend was seen across all lender types, with private banks showing the largest increase in average loan size.

A growing number of loans is also being upgraded to the higher ticket category. Loans above Rs 3 lakh accounted for a relatively significant share of the sourcing value from urban and semi-urban segments, owing to the high value of collateral and increased loan amount demand.

NBFCs Gain Market Share

The report has pointed to another change in the lending ecosystem, as non-banking financial companies (NBFCs) expand their footprint in the segment.

Gold loan sanctions grew 105 per cent year-on-year in value and 37 per cent in volume during FY26 Q4. During the same period, NBFCs increased their market share in sourcing value to 44 per cent from 33 per cent a year earlier.

Public sector banks saw their share decline from 45 per cent to 37 per cent over the same period, although they continue to hold the largest share of the overall gold loan portfolio.

Experian said that changing customer preferences, wider distribution networks and quicker processing times have contributed to the growing role of NBFCs in the market.

Demand Expands Beyond Southern States

Traditionally concentrated in southern India, gold loan growth is now spreading across other regions as well.

Among major states, Uttar Pradesh recorded 138 per cent growth in sourcing value in FY26, followed by West Bengal at 112 per cent, Rajasthan at 105 per cent, Maharashtra at 102 per cent and Gujarat at 101 per cent.

The report has mentioned, this indicates broader acceptance of gold-backed borrowing across the country, beyond traditional markets such as Tamil Nadu, Karnataka, Andhra Pradesh and Telangana.

The overall gold loan portfolio grew to Rs 19.4 lakh crore as of March 2026 from Rs 13 lakh crore a year earlier, registering growth of 49 per cent.

Portfolio Quality Improves

Despite the rapid rise in loan disbursements, asset quality indicators showed improvement. The net 30-plus delinquency ratio fell from 2.2 per cent to 1.0 per cent, while the net 90-plus delinquency ratio dropped from 0.4 per cent to 0.2 per cent.

The report noted that stronger growth in the loan book did not create deterioration in credit quality, suggesting that gold loans continue to remain a relatively stable secured lending segment even as borrowing activity increases.