Gold loans have witnessed a sharp expansion over the past three years, emerging as India’s second-largest retail credit product by balance share, according to a report released by TransUnion CIBIL.
The report, titled
‘Gold Loan Landscape’ report, shows that gold loan balances have grown 3.8 times since March 2022, with their share in the country’s retail credit portfolio rising from 5.9% to 11.1% by December 2025.
According to Bhavesh Jain, managing director and chief executive officer (MD&CEO) of TransUnion CIBIL, gold loans are increasingly becoming a mainstream, organised and accessible form of secured credit. Their rapid growth reflects both lender confidence and rising consumer acceptance. "“What is particularly notable is that the segment is drawing more borrowers with stronger credit profiles, larger ticket sizes and repeat usage. This is an indication that gold loans are no longer being used only for short-term liquidity needs but are becoming part of broader household borrowing behaviour,” he says.
This rapid growth reflects a structural shift in borrower behaviour, with gold-backed loans increasingly moving beyond their traditional role as short-term liquidity tools to become a mainstream and organised form of secured credit.
Rapid Expansion across Lenders and Markets
The report highlights strong momentum across banks and non-banking financial companies (NBFCs). Public sector banks (PSBs) increased their share of gold loan balances from 57% in March 2022 to 62% in December 2025, while NBFCs expanded their share from 7% to 11% over the same period.
The scale of borrowing has also increased significantly. The average gold loan balance per account rose from ₹1.1 lakh in March 2022 to ₹1.9 lakh by December 2025, indicating deeper borrower engagement and higher credit utilisation.
Supply-side indicators point to sustained expansion. Origination volumes have grown 2.3 times since early 2022, while the value of loans disbursed has surged 5.1 times. The average ticket size has more than doubled from ₹90,000 to ₹1.96 lakh, suggesting that borrowers are increasingly using gold loans for larger financing needs.
Borrower Profile Undergoing a Shift
One of the most notable trends is the changing composition of borrowers. The share of prime and above-prime borrowers in gold loan originations has increased from 43% in 2022 to around 52% in 2025, indicating rising participation from financially stronger customers.
At the same time, the share of new-to-credit borrowers has declined from 12% to 6%, suggesting that gold loans are no longer limited to financially excluded segments but are being integrated into the borrowing portfolios of credit-active individuals.
Mr Jain says, “Gold has always held deep financial and cultural relevance in India, but what we are seeing now is a structural shift in how gold-backed borrowing is being used. Gold loans are increasingly becoming a mainstream, organised and accessible form of secured credit."
He added that the segment is witnessing higher ticket sizes, repeat usage and stronger borrower profiles, indicating that gold loans are now part of broader household borrowing behaviour rather than just emergency financing.
Women Borrowers Drive Growth
The report also highlights the growing role of women in the expansion of gold loans. Women accounted for 39% of gold loan originations by volume in 2025, up from 36% in 2022.
While southern India has traditionally dominated the gold loan market, growth is now spreading across western and northern regions. States such as Telangana, Uttar Pradesh, Rajasthan, Gujarat, Maharashtra and Madhya Pradesh are seeing rising participation from women borrowers.
This trend points to a broader geographic and demographic expansion of the segment.
Higher Leverage and Rising Exposure
Alongside growth, borrower leverage is also increasing. The average outstanding amount per borrower rose from ₹1.9 lakh in December 2022 to ₹3.1 lakh by December 2025.
The share of borrowers with gold loan exposure exceeding ₹2.5 lakh has increased to 14%, compared to 10% three years earlier. In addition, borrowers with higher unsecured debt exposure are becoming more prominent, suggesting that gold loans are increasingly being used alongside other credit products.
Risk Concerns Emerge
Despite strong growth, the report flags emerging risks that could undermine the segment's sustainability.
Overall delinquency levels remain relatively low at 1.1% for loans originated in the six months ended June 2025. However, borrowers with post-origination exposure above ₹2.5 lakh show a significantly higher delinquency rate of 1.5%, compared to 0.7% for those with lower exposure.
The report also points to risks linked to borrower behaviour, including high dependence on gold loans, recent delinquency in other credit products, and concentration of borrowing within a single loan type.
In particular, borrowers with a history of serious defaults who subsequently rely heavily on gold loans are more likely to exit the formal credit system. Their credit-access closure rate is about 1.6 times higher than that of non-defaulting borrowers.
Need for Balanced Growth
Mr Jain cautioned that while the segment offers significant growth opportunities, lenders must adopt a more comprehensive risk assessment approach.
“As the gold loan segment expands, lenders’ priority must be to balance growth with prudence. Collateral strength remains important, but it cannot be the sole criterion for evaluating borrowers,” he said.
He emphasised the need for lenders to assess total indebtedness, repayment capacity, credit behaviour and cross-lender exposure more holistically. Stronger loan-to-value checks, risk-based pricing and closer monitoring of repeat borrowing will be critical to ensure sustainable growth.
A Structural Shift in India’s Credit Landscape
The findings underline a broader transformation in India’s retail credit ecosystem, with gold loans evolving from a niche product to a key component of formal lending.
With rising acceptance among credit-active borrowers, expanding lender participation and growing ticket sizes, the segment is poised to play an increasingly important role in household financing—provided risks are managed effectively.
1. The Lender Group Composition Change chart shows that PSU Banks are still the major players. ‘Others’ may include private lenders in semi urban or rural areas who are still holding almost the same share.
2. The observation by Bhavesh Jain on this rapid growth in gold loan seem to be concerning. What made the borrowers with stronger credit profile to go for gold loan? The margin is as high as 25-30% and the ROI is ranging anywhere between 9% and 24% eventhough this is the most secured lending.
3. Though the market share of Northern states is quite low, the percentage origination volume growth is the highest there.
4. We need to know the percentage of defaults and recovery by sale or auction.
5. Why the share of prime and above-prime borrowers has increased so much? Mr. Jain has also observed ‘repeated usage’ which may be debt trap. Is there something to read in between the lines? Is it that some specific layer of borrowers have heavily lost somewhere?