According to RBI data and multiple reports, the outstanding stock of gold loans more than doubled in the year ending March 2025—rising from just over ₹1 lakh crore in March 2024 to ₹2.1 lakh crore, marking a 103% year-on-year jump
🔍 Key Growth Drivers
- Soaring Gold Prices: With gold prices increasing ~20–30% over the year, borrowers received higher loan values per gram pledged, boosting loan volumes even without increasing pledged quantities
- Credit Slowdown: Growth in unsecured personal loans slowed sharply due to tighter RBI norms; borrowers pivoted to gold loans as an easier and faster financing route
- Regulatory Reclassification: Some agricultural loans were recategorized as gold loans, artificially inflating volumes in that segment
🧮 Sector-Wide Trends & Risks
- In Q3 FY25, gold loans issued by banks rose by over 71%, reaching ₹1.72 lakh crore by December 2024
- RBI’s March sectoral data showed a nearly 77% rise in gold loans through January 2025, while other credit segments such as credit cards and personal loans saw declining growth rates Outlook Money.
- Non-performing assets (NPAs) in the segment increased by around 30%, reaching over ₹6,800 crore by mid‑2024—highlighting rising credit stress
- RBI is set to issue tighter norms on underwriting, appraisal, collateral monitoring, and fair auctions to rein in emerging irregularities in the gold loan space
📋 Snapshot Overview
| Metric | Value |
|---|---|
| Outstanding Gold Loans (Mar 2024) | ₹1.0 lakh crore |
| Outstanding Gold Loans (Mar 2025) | ₹2.1 lakh crore |
| Growth Rate (YoY) | ~103% |
| December 2024 Volume (Banks) | ₹1.72 lakh crore |
| Credit Growth in Unsecured Loans | Slowed sharply |
| Gold Loan NPAs (mid‑2024) | ~₹6,800 crore; ~30% higher YoY |
| RBI Response | Drafting comprehensive guidelines |
🌟 What It Means
- Household Liquidity Pressure: The boom underscores how middle- and lower-income households resort to gold collateral to meet cash needs amid employment and income challenges
- Shift to Collateralized Lending: Gold loans’ relative ease, trust, and higher LTV limits (up to 75%) make them a growing choice over more regulated personal loans
- Potential for Credit Overhang: Rising defaults and collateral value fluctuations could expose banks and NBFCs to asset-quality stress despite the secured nature of such loans
- Regulatory Tightening Ahead: RBI has highlighted misuse and operational gaps; upcoming norms are expected to strengthen oversight, valuation, and loan conduct across lenders
🔭 Outlook
- With gold loans projected to cross ₹10 lakh crore in the full year 2025, the sector remains a high-growth and high-risk asset class requiring vigilant monitoring and risk calibration
- Analysts and regulators will focus on NPA trends, LTV discipline, and borrower segmentation to ensure sustainable lending practices as gold-backed borrowing continues to rise.
