New Delhi: Gold loans have doubled in FY25, emerging as the fastest-growing retail credit segment, outpacing housing, vehicle, credit card, and personal loans, according to the Reserve Bank of India (RBI).

Outstanding bank credit against gold jewellery stood at ₹2.09 lakh crore as of March 21, 2025, compared with ₹1.03 lakh crore a year ago, RBI data shows.

Bankers attribute this surge to three main factors:

  • Rising gold prices which enhanced borrowing potential.
  • RBI’s crackdown on unsecured loans like personal loans and microfinance, pushing borrowers toward safer, secured options.
  • Reclassification of some agriculture loans as gold loans by a few banks in 2024.

Between March 2020 and March 2025, gold loans grew at a 44% CAGR, far outpacing the 17% CAGR in gold prices. In the same period, the gold loan book of banks jumped from ₹33,257 crore to ₹2.08 lakh crore, while gold prices rose from ₹38,600 per 10 gm to around ₹85,800 per 10 gm.

Banks & NBFCs Ride the Gold Wave

  • State Bank of India’s gold loan book surged 53% YoY to ₹50,011 crore in March 2025.
  • CSB Bank’s gold loans grew 35% YoY, now forming 44% of its loan book.
  • Muthoot Finance crossed the ₹1 lakh crore AUM milestone in March 2025.
  • Ujjivan Small Finance Bank completed its first full year of gold loan operations in FY25.

Executives say gold loans are attractive because of low risk, repeat borrowers, and short tenures. Borrowers often close and re-pledge the same gold when prices rise, allowing them to borrow more against the same jewellery.

Meanwhile, demand for gold jewellery fell 25% YoY in Jan–Mar 2025 (World Gold Council), as consumers preferred pledging jewellery for loans rather than buying new ornaments.

Analysts note that the FY25 growth was driven more by value than volume, meaning higher gold prices allowed larger loans per customer, even if the number of borrowers didn’t spike dramatically.

“Gold loans are almost zero-risk, especially for South-based banks where it’s in the DNA,” said Ajay Kumar Srivastava, MD of Indian Overseas Bank. “However, new entrants raise concerns of mis-selling.”

With both banks and NBFCs expanding aggressively, the gold loan market is now estimated at ₹4 lakh crore, making it one of the most resilient and fastest-growing lending categories in India.