Summary of this article
Gold loans quadruple in three years, driven by price rise
Semi-urban and rural borrowers fuel secured credit growth
Lenders shift focus to asset quality and profitability
Gold loans have quietly become one of the most resilient and fastest-growing segments in the lending market over the past few years, even as attention remains on unsecured retail credit and digital lending. According to insights shared at the BFSI Conference 2025 hosted by Antique Stock Broking, gold loans have expanded nearly four times in the last three years.
This growth has been driven by rising gold prices, higher average loan sizes, and steady demand for gold loans from semi-urban and rural borrowers.
Rural and Semi-Urban Demand Drives the Growth
Experts at the conference said that over 60 per cent of the new retail loan originations are now from the semi-urban and rural areas. Gold is still the most common and trusted liquid and collateral element used in these areas, according to a news report by ANI.
They added that delinquencies were structurally higher in the semi-urban and rural markets, which has pushed lenders to focus on sharper pricing and stronger underwriting standards. In such conditions, gold loans were often preferred over unsecured credit as they offer faster disbursement, flexible repayment options, and lower effective rate of interest rates. All these factors make gold loans suitable for borrowers with irregular cash flows.
Favour among Lenders
Gold loans are also winning favour among lenders due to their cheap credit charges and quicker turnover.
According to industry analysts, gold loans have good cross-sell features, which also allow lenders to extend customer relationships without a huge risk.
Gold loans are also viewed as a sure growth driver at a time when discipline in underwriting procedures across the system has become more stringent. Some banks and small finance banks (SFBs) have shown intentions to distribute more gold loans in their branches over the next two years. The product is increasingly being positioned as a core balance sheet stabiliser rather than a niche offering.
MFIs and Fintechs Reset Strategy
Microfinance institutions (MFIs) are also re-evaluating the growth models. As pure-play microfinance is structurally constrained, most MFIs are considering diversifying their portfolios by adopting secured forms, such as gold loan and property loans, the report said.
Banks and as well as non-banking financial companies (NBFCs) and fintechs are re-evaluating the growth strategies. The focus has shifted towards asset quality, secured lending and profitability instead of aggressive balance sheet expansion.
RBI Data Confirms Trend
According to the State of the Economy report of the Reserve Bank of India (RBI) of December 2025, loans secured against gold jewellery have registered a triple-digit rate of growth since February 2025, much higher than general credit growth.
Although gold loans constitute a small portion of total non-food credit, its percentage has almost doubled in the last one year. According to the RBI data, total outstanding loans against gold jewellery increased by 128.5 per cent in comparison to the previous year to reach Rs 3.38 lakh crore in October 2025, which also represents a significant shift in borrowing preference.
