Summary of this article
Gold loans have nearly doubled in December quarter from year ago
PSBs lead in total number of disbursements, but NBFCs show sharpest growth
Gold loan disbursements surged 94 per cent to Rs 8.16 lakh crore in Q3 FY26 from a year ago owing to a rise in demand for gold-backed loans over other kinds of loans by businesses, according to a report by Equifax Retail Insights. Gold loan disbursements were at Rs 4.23 lakh crore in the corresponding quarter of FY25.
The rise in gold loans was led by disbursements of non-banking financial companies (NBFCs), which recorded nearly a three-fold rise during the October-December quarter of FY26 to Rs 2.50 lakh crore from a year ago.
Disbursements of gold loans by public-sector banks saw a 71.20 per cent rise to Rs. 3.75 lakh crore, while that by private sector banks recorded a 65.80 per cent rise to Rs. 1.21 lakh crore during the December quarter of FY26. State-owned banks remained the largest section to disburse gold loans, contributing around 46 per cent of the total disbursements.
The surge in demand for gold loans came at a time when gold prices also rose sharply. Gold prices have risen at a compounded annualised growth rate (CAGR) of 25 per cent over the last three years, and the demand for gold loans indicated a firm case of product substitution, the report said.
For NBFCs, while the sharp growth in gold loans was seen, demand for other business segments remained muted. Business loans grew only 5 per cent while commercial vehicle loans grew by 10 per cent from the previous year. The report said that while borrowers prefer gold loans, the segment alone will not be able to sustain business needs in the long run.
“Borrowers seem to prefer gold loans over other available means for their business needs. However, gold loans alone cannot sustain the growth momentum for very long as the underlying asset growth may not keep pace,” it said.
Fresh disbursements by the end of December rose 40 per cent from a year ago, while overall assets under management (AUM) rose around 13 per cent. This marked one of the strongest growth in AUM in recent years.
During the December quarter, personal loans also rose, with disbursements jumping around 34 per cent from a year ago, showing a rebound. State-owned banks led the rise, recording a 42 per cent increase from the previous year, which was nearly double the growth of private sector banks. Meanwhile, the share of loans below Rs 10 lakh also showed a surge to 37 per cent over the last two years, showing lenders choosing a ‘flight to quality’, the report added.
