Indian households and small businesses are increasingly borrowing against gold jewellery as the gold-backed loan market expands rapidly [1, 2].
This shift highlights a growing reliance on physical assets for liquidity. As traditional credit conditions tighten, gold has emerged as a primary tool for Indians to fund essential expenses, including medical bills, education, and business operations, without selling their assets [1, 2].
The scale of this growth varies by report. Some data indicates the gold loan portfolio grew 50% year-on-year in fiscal year 2025-26 [1]. Other figures from Experian suggest a more aggressive surge of 84% during the same period [3].
Market valuations reflect this upward trend. India's gold-loan market reached ₹18.6 trillion in FY26, which represents a 50.4% increase from the previous year [5]. These loans now account for nearly 31% of overall securitized volume [4].
Borrowers are also taking out larger individual loans. The average gold-loan ticket size rose 39% year-on-year to reach ₹1.96 lakh in FY26 [6]. This increase suggests that borrowers are either leveraging higher gold prices to secure more capital or facing larger financial requirements.
The rise in gold-backed credit is driven by a combination of rising gold prices and a need for immediate cash. By using jewellery as collateral, borrowers can access funds more quickly than through traditional unsecured loans, while maintaining ownership of the gold once the debt is repaid [1, 2].
“Gold-backed loans in India have surged sharply, becoming a fast‑growing retail credit segment.”
The rapid expansion of gold loans indicates a structural shift in India's retail credit landscape. By monetizing idle gold, citizens are creating a private safety net to bypass rigid banking requirements. This trend reflects a broader economic environment where rising commodity prices are being leveraged to offset tight liquidity in the formal credit market.
