Gold Loans in India: From Emergency Credit to Mainstream Borrowing

Gold Loans Emerge as a Mainstream Credit Option in India

Gold loans in India are shedding their image as emergency-only credit and are increasingly being used as a practical borrowing solution. By August 2025, the total outstanding gold-backed loans soared to Rs 2.94 lakh crore, marking a 122% year-on-year increase from Rs 1.32 lakh crore in July 2024.

In FY25 alone, gold loans jumped 103%, from Rs 1 lakh crore in FY24 to nearly Rs 2.1 lakh crore, outpacing growth in personal loans (8% YoY) and credit card lending (6% YoY).

Why Gold Loans Are Gaining Popularity

Rising Gold Prices: Gold prices have surged 44.1% in 2025, reaching Rs 1,13,800 per 10 grams in September from Rs 78,950 at the end of 2024. Higher valuations allow borrowers to pledge less gold for larger loans, making gold loans more attractive amid economic uncertainty.

Regulatory Support: RBI’s reclassification of agricultural loans, stricter NBFC norms, and tiered loan-to-value (LTV) guidelines in 2025 have expanded protections for borrowers and formalised gold lending.

Digital Access and Speed: Banks and fintech firms are leveraging AI-based valuations and mobile apps to offer fast, contactless approvals. Minimal documentation and quick disbursals make gold loans accessible even to borrowers with limited credit history or banking experience.

Diversified Borrower Profile: Demand spans urban, semi-urban, and rural areas, with notable uptake in Gujarat, Maharashtra, and Odisha. Gold loans are increasingly used for weddings, education, health emergencies, small businesses, and working capital, not just urgent cash needs. Interest rates of 8–12% per annum remain lower than most unsecured credit, boosting appeal.

Mainstream Acceptance

Behavioral shifts and digital adoption have helped gold loans shed their “last resort” stigma. Public sector banks, NBFCs, and fintech platforms are innovating with technology-driven, transparent, and regulated services to meet rising demand. Stricter risk-weighting for personal loans and credit cards has further nudged borrowers toward secured options like gold loans.

Analysts say the surge reflects broader economic trends: households and small businesses are seeking secure, fast, and flexible credit amid rising costs and uneven income growth.

By 2025, gold loans are no longer just a financial safety net—they have become a core component of India’s retail credit landscape, offering speed, flexibility, and affordability for a wide range of borrowers.