Gold Loans Surge 4X: Analyzing India's Structural Shift in Secured Credit Market

Gold-backed lending has witnessed a dramatic transformation in India, with the market for gold loans expanding fourfold over the past three years. New reports indicate a sharp rise in consumer demand and the mainstream acceptance of gold as a secure collateral for credit. This growth signals a structural shift, cementing gold-backed lending as a vital component of India’s retail credit ecosystem.

The analysis, provided by TransUnion CIBIL, highlights that gold loan balances have multiplied nearly four times since March 2022. Consequently, the segment's contribution to India’s retail credit portfolio has climbed significantly, moving from 5.9 per cent to approximately 11 per cent by December 2025. This elevates gold loans to the position of the second-largest retail credit product by balance share.

Exponential Growth in Credit Demand and Ticket Sizes​

The surge is driven by multiple factors, including higher borrower adoption rates, increasing average ticket sizes, and wider participation from financial lenders. Consumers are increasingly relying on gold-backed credit, making the sector highly dynamic.

The average gold loan balance per account has risen markedly, increasing from ₹1.1 lakh in March 2022 to ₹1.9 lakh by December 2025. Furthermore, origination volumes have surged 2.3 times since Q1 2022, while the total origination value jumped around five times. The average ticket size grew from ₹90,000 in Q1 2022 to ₹1.96 lakh in Q4 2025, demonstrating improved borrowing capacity.

Shifting Borrower Profiles and Key Growth Drivers​

The borrower base is maturing, moving away from new-to-credit reliance. The share of prime and above-prime borrowers rose from 43 per cent in 2022 to about 52 per cent in 2025. Conversely, the share of new-to-credit customers declined from 12 per cent to 6 per cent.

Women borrowers have emerged as a particularly powerful growth segment. Their contribution to gold loan originations rose from 36 per cent in 2022 to 39 per cent in 2025. This traction is visible across both traditional southern markets and states such as Uttar Pradesh, Rajasthan, Gujarat, Maharashtra, and Madhya Pradesh.

Lender Participation Dynamics and Market Evolution​

Lender participation is diversifying, with both Non-Banking Financial Companies (NBFCs) and public sector banks increasing their footprint. NBFCs’ share in gold loan balances increased from 7 per cent in March 2022 to 11 per cent in December 2025. Meanwhile, public sector banks also consolidated their position, seeing their share climb from 57 per cent to 62 per cent during the same period.

Bhavesh Jain, MD and CEO of TransUnion CIBIL, noted that while gold has always maintained deep financial and cultural relevance, the current momentum marks a structural change. He stated that gold loans are increasingly becoming a mainstream, organized, and accessible form of secured credit.

Asset Quality Concerns Amid Rapid Expansion​

While the growth is robust, the rapid scaling has brought attention to asset quality. The data revealed that borrowers with higher exposure show elevated risk.

For loans originated in the six months ending June 2025, the overall delinquency rate stood at 1.1 per cent. However, borrowers with exposure above ₹2.5 lakh showed a delinquency rate of 1.5 per cent. This rate is more than double the 0.7 per cent recorded among lower-exposure borrowers, prompting caution among financial analysts.