Gold Loans Shine With 124% Growth as Rising Collateral Pushes Demand

Loans against gold jewellery have doubled in one year, setting new records in India’s retail credit market. RBI data shows the surge is faster than any other personal loan category.

Can gold locked in a household cupboard change the credit story of India? It seems so. Loans against gold jewellery have risen sharply in 2025. According to the Reserve Bank of India (RBI), this segment of personal loans grew by 124 per cent year-on-year in June 2025.

The outstanding amount of loans stood at ₹2.77 lakh crore compared to ₹1.24 lakh crore in June 2024. The pace has surprised both lenders and policymakers.

Gold Loans Demand Growth in 2025 Outpaces All

The RBI’s Sectoral Deployment of Bank Credit Report released in July 2025 confirmed this steep rise. Gold loans stood at ₹2.77 lakh crore as of June 27, 2025. This was more than double the figure of June 2024. Such growth made gold-backed loans the fastest-growing among personal loans.

Compared to this jump, personal loans as a whole grew by only 16 per cent in the same period. Vehicle loans rose by nine per cent. Credit card dues grew by about 20 per cent. Gold loans alone touched three digits in percentage growth.
 

The table makes it clear. Demand for gold-backed lending is no longer a side trend. It is the core growth driver inside banks’ personal loan portfolios.

Collateral Value Impact On Gold Loans

The sharp jump cannot be explained without looking at collateral. Gold prices in India have moved up by about 50 per cent in one year, as reported by Financial Express in August 2025. A chain pledged last year is now valued far higher, allowing a borrower to raise a larger sum.

The RBI allows banks to lend up to 75 per cent of the assessed gold value under the loan-to-value (LTV) rule. This assessment is done by taking the average market price of 22-carat gold over the past 30 days. With prices touching new highs, the sanctioned amounts have swelled.

In February 2025, CareEdge Ratings explained how part of the increase was also due to a shift in classification. Agricultural gold loans were reclassified into retail jewellery loans. That change inflated the growth numbers but also gave a clearer picture of how urban and semi-urban families are using gold for credit.
 

The link between commodity price and credit growth explains why banks are suddenly flush with gold-backed lending.

Gold Loan Market Expansion Trends Over Years

The present growth connects with a longer market trend. A report by Praxis Global Alliance in March 2024 recorded that the gold loan market grew at a 20 per cent compound annual growth rate (CAGR) between FY2019 and FY2024. The size rose from USD 33 billion in FY2019 to USD 83 billion in FY2024.

PwC India and IBEF in their report Striking Gold projected that the market will double again to USD 169 billion by 2030. This expansion suggests that the current numbers are not an anomaly. Instead, they are part of a multi-year climb in secured retail lending.

Back in April 2024, this newsroom reported on the steady rise of secured personal loans during high inflation. That article can be revisited here: Personal Loan Market Swells Amid Rising Inflationary Costs. The current data builds on the same pattern, only at a sharper scale.
 

The table shows that the demand for gold loans is part of a decade-long market build-up.

Rising Gold Prices And Loan Demand In Cycles

Every surge has a history. Gold-backed loans are not new in India. During 2013, when gold prices were volatile, RBI tightened rules by enforcing stricter LTV caps. The aim was to protect banks from over-lending during uncertain times.

In contrast, during 2020 when the pandemic slowed the economy, RBI temporarily raised the LTV ratio for non-agricultural gold loans to 90 per cent. This was to push liquidity into households facing sudden income loss.

Now in April 2025, Reuters reported that RBI drafted new guidelines on lending against gold and silver collateral. These drafts proposed mandatory purity checks and standard valuation methods across lenders. The regulator acted after gold loan growth touched triple digits for consecutive months.
 

This record shows that policy reacts each time the shine of gold reshapes lending numbers.

Gold-Backed Loan Industry Growth Insights And Risks

The gold-backed loan industry growth insights are more than statistics. Families see these loans as fast and simple. Banks see them as secured and less risky than unsecured personal loans. Market share of gold loans in total bank credit has risen from 0.6 per cent in 2024 to 1.1 per cent in mid-2025.

But the same growth carries risks. If gold prices fall, collateral value will shrink. Banks may then face stress in covering exposures. The RBI’s draft rules show that policymakers are alert to such risks.

Industry analysts note that the rapid growth is unlikely to stop soon. Demand is rising in both urban and rural areas. Rising living costs, festival purchases, and business needs are driving households to tap into stored gold.

For more insights, see LoansJagat’s coverage on RBI data showing gold jewellery loans surging 124% in June 2025.

Conclusion

Gold jewellery loans have turned into India’s fastest-growing credit story of 2025. With 124 per cent year-on-year growth, an outstanding book of ₹2.77 lakh crore, and a market on track to double in size by 2030, the sector is firmly in focus. Reports by RBI, CareEdge Ratings, Praxis Global Alliance, PwC India, and IBEF confirm the depth of this growth. 

Past cycles show that regulators adjust policy when gold-backed lending moves too fast. The story of 2025 is one where rising collateral has changed the course of retail lending in India.

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