Summary of this article
Gold-backed personal loans rose sharply, led by jewellery loans
MSME and micro enterprise credit recorded strong year-on-year growth
Formal borrowing increased among unincorporated non-agricultural enterprises
The Economic Survey 2025-26 has indicated that there has been a sharp acceleration in certain loan segments, with evidence of strong growth in gold loans, as well as in micro, small, and medium enterprises (MSME) credit during the recent periods.
According to the survey, personal loans showed a year-on-year (YoY) growth of 12.8 per cent in November 2025. Within this segment, loans against gold jewellery grew sharply by 125.3 per cent YoY. This increase was attributed largely to the sharp rise in gold prices, which increased the borrowing value of the pledged jewellery.
Growth In Personal And Gold-Backed Loans
The Survey's data on sectoral deployment of non-food credit has shown that personal loans expanded at a faster rate than the credit to industry and services in November 2025. Within the personal loans category, gold loans became a crucial factor for overall growth.
The rising gold prices contributed to the increase in the value of loans backed by gold jewellery. As a result, gold loans recorded the highest growth among all personal loan categories during 2025-26.
MSME Credit Remains Robust
Bank credit to the MSME sector displayed strong growth. In November 2025, bank credit to MSMEs rose 21.8 per cent YoY, as compared to the increase of 13 per cent in November 2024.
Within the MSME category, the expansion of credit to micro and small enterprises was even higher. Lending to this category increased by 24.6 per cent year on year in November 2025 from 10.2 per cent in the same period last year. The survey has attributed this growth to a number of policy measures, such as revised guidelines for voluntary pledging of gold and silver jewellery as collateral for small business loans.
Budget measures designed to enhance the availability of credit with guarantee cover to MSMEs, as well as the introduction of credit cards for micro enterprises, are also mentioned as supporting factors.
Increase In Formal Borrowings By Unincorporated Enterprises
The Economic Survey has also drawn attention to changes in borrowing behaviour of unincorporated non-agricultural enterprises, drawing on data from the Annual Survey of Unincorporated Sector Enterprises.
The average outstanding loan per unincorporated non-agricultural establishment grew from Rs 50,138 in 2022-23 to Rs 53,710 in 2023-24, registering a growth of 7.12 per cent.
During the same period, the proportion of unincorporated manufacturing establishments availing formal sources of credit increased from 48 per cent in 2021-22 to 51 per cent in 2023-24. The Survey has found a rise in the amount of borrowing from commercial banks and a drop in the use of informal lenders.
Interest Burden Across Loan Sources
The movement towards formal borrowing has also been linked to a reduced burden of interest. Loans from formal institutions are generally less costly in terms of interest than from informal sources.
This trend is similar across most loan sizes, even in small ticket loans (less than Rs 50,000), though the survey has pointed out that in some cases, interest expenditure on small loans from commercial banks may be similar to informal sources.
Despite growing access to formal finance for moderate and large loan requirements, the survey has verified that small-ticket loans still depend more on informal sources. Barriers to accessing formal credit include lack of documentation, thin credit histories and the lack of formal banking relationships.
Overall Credit Trends
The Economic Survey 2025-26 has reported that overall bank credit grew at a moderate rate across sectors earlier in FY26 but registered an uptick in recent months.
As of December 2025, YoY growth in outstanding credit stood at 14.5 per cent by scheduled commercial banks, as compared to 11.2 per cent in December 2024. Better quality of assets, reduction in non-performing asset ratio and better profitability helped in the banking system across this period.
