Nationalised Banks Hold 60% of India’s Gold Loans Outstanding: What It Means for the Credit Market

India’s credit landscape is witnessing a notable shift as gold-backed lending emerges as one of the fastest-growing segments in retail finance. According to the latest CreditScape: Gold Loans in India report by CRIF High Mark, as of November 2025 nationalised banks accounted for nearly 60 per cent of the total gold loan portfolio outstanding, reinforcing their dominant position in this secured lending space. 

This trend reflects changes in borrower behaviour, lender strategies, and macroeconomic conditions that are reshaping the dynamics of credit in India.

What Is Driving the Growth in Gold Loans?

Gold loans are secured loans where borrowers pledge physical gold jewellery or coins as collateral in exchange for credit. They are typically disbursed faster and at lower interest rates than unsecured debt such as personal loans. 

Over the past year, the total gold loan portfolio outstanding surged to approximately ₹15.6 lakh crore, a jump of nearly 42 per cent year-on-year, outpacing both overall retail credit growth and consumption loans.

Two clear trends are visible:

• Higher Loan Values: Rising gold prices have elevated the value of pledged collateral. This allows borrowers to secure larger loan amounts against the same quantity of gold, fuelling portfolio growth even though the number of active accounts grew moderately (about 10 per cent year-on-year).
• Public Sector Strength: Nationalised banks are skewing their portfolios towards higher-value gold loans, utilising their balance sheet strength and lower cost of funds to fund larger ticket lending.

This pattern suggests that while more borrowers are not necessarily taking out gold loans, the value of loans per borrower has increased, pushing up total outstanding figures.

Nationalised Banks vs NBFCs: Who Leads What?

There is a clear split between traditional lenders and non-bank financial companies (NBFCs):

• Nationalised Banks (PSUs): Hold close to 60% of total outstanding gold loans and about 46.6% of active accounts. Their strength lies in financing larger loans backed by stronger collateral, often to established customers or businesses.
• Gold-Loan NBFCs: While they hold only about 8.1% of the value, they command a higher portion of active loan accounts (around 16.6%), especially in smaller, more frequent borrowing. Their focus is on quick processing and smaller tickets, often in semi-urban or rural markets.
• Private Sector Banks: Their share in both value and number of accounts has declined, squeezed between PSUs’ balance sheet advantages and NBFCs’ operational agility.

This contrast highlights how different lenders have carved niche roles: nationalised banks are capturing large ticket backed credit, whereas NBFCs cater to volume-oriented retail demand.

What the Numbers Suggest About Borrower Behaviour?

The CRIF report also reveals that a majority of gold loan borrowers hold only one active gold loan, accounting for about 32 per cent of the total loan value. In contrast, a small cohort with multiple loans (four or more) contributes disproportionately to the outstanding value, signalling a concentrated exposure among a subset of borrowers.

Geographically, the top ten states account for more than 90 per cent of the gold loan portfolio, with southern states contributing over three-quarters of this share. Gujarat, in particular, recorded a robust year-on-year growth. 

This regional skew reflects differences in gold ownership patterns, income levels, and access to formal credit channels across states.

Implications for the Broader Credit Market

The rapid expansion of gold-backed credit carries several implications:

• Secured Credit Preference: Borrowers appear to prefer gold loans because they are secured, faster to access, and often priced more competitively than unsecured personal finance.
• Balance Sheet Strength: Nationalised banks’ dominance suggests that large lenders are comfortable increasing exposure where collateral values are rising, especially against a backdrop of economic caution.
• Regulatory Attention: With gold loans making up roughly 9.7% of total retail loans and 14% of consumption loans, regulators may soon focus on underwriting quality, risk concentration, and prudent collateral valuation.

Conclusion

India’s gold loan market is maturing into a sizeable and strategically important segment of retail credit. Nationalised banks have taken the lead in capturing the bulk of this growth by focusing on higher ticket lending, while NBFCs continue to serve smaller accounts aggressively. 

As gold prices remain elevated and secured lending becomes more attractive relative to unsecured options, gold loans are likely to remain a key driver of loan book expansion in coming quarters.