The data shows a heavy concentration of PSB gold lending in five states, with Tamil Nadu, Andhra Pradesh, Karnataka, Telangana and Kerala together accounting for ₹9.10 lakh crore, or about 80.36%, of the total state-wise PSB gold-loan outstanding of ₹11.32 lakh crore.
The figures were disclosed by minister of state for finance Pankaj Chaudhary in response to a question on non-performing assets (NPAs) in gold loans by member of Parliament (MP) Dr CM Ramesh.
However, the government clarified that the Reserve Bank of India (RBI) does not maintain state-wise information on outstanding gold loans. The state-level figures supplied in the answer are therefore limited to gold loans outstanding with PSBs and cannot be used to establish the state-wise distribution of the entire ₹18.62 lakh crore gold-loan portfolio referred to in the question, the minister said.
Tamil Nadu Accounts for More Than a Third of PSB Gold Loans
Tamil Nadu emerged as the largest state for PSB gold loans, with outstanding loans of ₹411,656 crore, equivalent to about 36.37% of the total ₹11.32 lakh crore reported across the states and Union Territories (UTs).
Andhra Pradesh was a distant second with ₹222,953 crore, accounting for about 19.70% of the PSB portfolio.
Karnataka ranked third with ₹98,962 crore, followed by Telangana at ₹92,394 crore and Kerala at ₹83,657 crore.
Together, these five states account for about four-fifths of PSB gold loans.
The next largest state was Maharashtra, with ₹45,710 crore, followed by Gujarat at ₹23,381 crore, Uttar Pradesh at ₹21,745 crore, Rajasthan at ₹19,705 crore and Madhya Pradesh at ₹19,028 crore.
West Bengal and Odisha had gold loan outstanding of ₹16,957 crore and ₹16,846 crore, respectively, while Punjab had ₹13,057 crore and Puducherry had ₹10,302 crore.
Five Southern States Account for 80% of PSB Gold Loans
The concentration becomes particularly pronounced when the five leading southern states are considered. Tamil Nadu, Andhra Pradesh, Karnataka, Telangana and Kerala, together, had ₹909,622 crore in outstanding gold loans with PSBs.
Against the total state-wise PSB outstanding of ₹11.32 lakh crore, their combined share works out to 80.36%.
The figures also show that the concentration is not uniform across the south. Tamil Nadu's PSB gold-loan outstanding of ₹4.12 lakh crore is more than four times Karnataka's ₹98,962 crore and nearly five times Kerala's ₹83,657 crore.
This is higher than the 75% figure mentioned in the Lok Sabha question, but the comparison is only valid for the PSB data supplied by the government. It cannot establish that five southern states account for 75% of the country's entire ₹18.62 lakh crore gold-loan outstanding.
The government has not provided a state-wise breakup of the ₹18.62 lakh crore figure across all lenders.
Gold-loan NPAs Have Declined, Not Risen
The government's response also counters concerns over a rising non-performing asset (NPA) trend in gold loans.
According to RBI data, the gross NPA (GNPA) ratio for gold loans of scheduled commercial banks (SCBs) declined from 0.19% in March 2023 to 0.12% in March 2026.
The ratio stood at 0.19% in March 2024 and rose marginally to 0.22% in March 2025 before falling sharply to 0.12% in March 2026.
For NBFCs (non-banking finance companies) in the middle and upper layers, the GNPA ratio was substantially higher but also declined over the period. It fell from 2.32% in March 2023 to 2.35% in March 2024, before declining to 2.13% in March 2025 and further to 0.81% in March 2026.
Thus, between March 2023 and March 2026, the GNPA ratio fell by 0.07 percentage point for SCBs, while the decline for NBFCs was 1.51 percentage points.
The government said the number of defaults in gold loans has declined during the last five years.
Importantly, the government has not provided a state-wise breakup of gold-loan NPAs in the answer. Consequently, it is not possible from these figures to say which state has the highest number or value of gold-loan NPAs.
RBI Sees Collateral Buffers as a Strength
Responding to concerns about whether rapid growth in gold lending could pose systemic or financial stability risks, the government cited RBI's assessment in its June 2026 financial stability report (FSR).
According to the response, the rapid growth in gold loans has been supported by rising gold prices. At the same time, loan-to-value (LTV) ratios across banks and NBFCs have declined despite growth in gold lending.
RBI has said this has strengthened collateral buffers and enhanced lenders' resilience to movements in gold prices. It has also reported that asset quality in the gold-loan portfolio remains stable, which the government attributed to the sound collateral position of lenders.
Gold-backed lending has also played a role in expanding formal credit access, particularly for rural borrowers, micro, small and medium enterprises and other underserved segments.
The government said such loans have helped bring new-to-bank and new-to-credit customers into the formal lending system and protected borrowers who might otherwise have relied on unorganised lenders charging high interest rates or imposing prejudicial loan conditions.
Gold Loans Are Not India's Second-largest Retail Loan Product
The government has also rejected the premise that gold loans are the second-largest retail lending product after housing loans.
Quoting information received from RBI, the minister said housing loans are the largest retail lending product as of 31 March 2026, followed by personal loans and vehicle loans.
RBI Tightens Gold Loan Rules
The government said RBI issued the directions on lending against gold and silver collateral in June 2025 to harmonise lending norms across banks, cooperative banks and NBFCs. The framework provides for prudent LTV requirements and standardised valuation of gold collateral.
It also contains safeguards for borrowers when lenders move to recover dues by auctioning pledged gold. These include adequate prior notice before an auction, a reserve price of at least 90% of the current collateral value, and repayment of any surplus remaining after the lender's dues have been recovered.
The framework also requires greater transparency in assaying, valuation, auction and recovery processes.
Banks and other regulated lenders are required to disclose charges upfront and use standardised documentation. The framework also provides for compensation in cases where there are delays in releasing pledged collateral.
2. It is bewildering to note that NBFC GNPA is higher than commercial banks. So much for the agility and alertness of private NBFCs.