Gold Loans Step Out Of The Margins, Become India’s No. 2 Retail Credit Segment

For years, gold loans have sat quietly in the background, used when cash was tight, repaid when things eased. That image is beginning to look dated.

Recent numbers from TransUnion CIBIL suggest the shift is no longer subtle. Since March 2022, the total value of gold loans outstanding has grown 3.8 times. In the same period, their share in the retail credit market has moved up from 5.9 per cent to 11.1 per cent by December 2025. That rise is enough to place gold loans just behind the largest retail credit category in the country.

The change is not being driven by one set of lenders alone. Public sector banks still account for the biggest chunk and have inched up their share from 57 per cent to 62 per cent. Non-banking financial companies, meanwhile, have expanded their presence from seven per cent to 11 per cent. What ties both together is the pace at which disbursals have picked up.

Loan sizes tell part of the story. The average balance per account has gone up from Rs 1.1 lakh to Rs 1.9 lakh over three years. That is not a marginal increase—it signals that borrowers are leaning more heavily on this form of credit, according to a recent press statement by TransUnion CIBIL.

From Emergency Use To Regular Borrowing

If earlier gold loans were taken for immediate needs, the pattern now looks different. Since early 2022, the number of loans issued has grown 2.3 times. But the value of loans disbursed has grown faster—by 5.1 times.

That gap reflects a steady rise in ticket sizes. The average loan, which was about Rs 90,000 in early 2022, is now close to Rs 1.96 lakh. Borrowers are clearly taking larger exposures than before.

There is also a shift in who is borrowing. More than half of the new loans are now going to prime and above-prime borrowers, up from 43 per cent three years ago. At the same time, fewer borrowers are entering the credit system for the first time through gold loans.

This suggests that gold loans are no longer just a fallback. They are increasingly being used by people who already have access to other forms of credit, fitting into a wider borrowing mix.

A Broader Base, With Women Playing A Bigger Role

Another change is visible in the borrower base. Women now account for 39 per cent of gold loan originations, up from 36 per cent in 2022. The increase may appear gradual, but it points to a widening user base.

The demand is no longer limited to its earlier strongholds in the South. Activity is picking up across a wider set of states, with Telangana, Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, and Madhya Pradesh all reporting increased borrowing against gold.

At the same time, the amount each borrower owes has increased. Per-borrower exposure has moved up noticeably over the past few years. The average outstanding has increased from about Rs 1.9 lakh in December 2022 to roughly Rs 3.1 lakh by December 2025, and a larger slice of borrowers now carry loans exceeding Rs 2.5 lakh—around 14 per cent at last count.

Growth Brings A Sharper Focus On Risk

Such a sharp rise also brings its share of concerns, and gold loans are no exception. For loans originated in the six months ending June 2025, overall delinquency was 1.1 per cent.

However, the numbers show a difference when loan sizes increase. Borrowers with exposure above Rs 2.5 lakh recorded a delinquency rate of 1.5 per cent, compared to 0.7 per cent among those with smaller loans.

There are also signs that some borrowers are leaning more heavily on gold loans when other credit options are limited. Those with past repayment issues appear more vulnerable, and in some cases, gold loans seem to be filling that gap.

For lenders, this raises a familiar question. The gold pledged offers security, but it may not be enough on its own. Looking at the borrower’s overall debt, repayment track record, and exposure across lenders becomes more important as loan sizes grow.

Gold loans have moved well beyond their earlier role. The bigger question now is not whether they will keep growing, but how that growth will be managed in the years ahead.