South India Controls 75% of India’s ₹18.6 Lakh Crore Gold Loan Market

Key Takeaways

1. The outstanding gold loans in India reached ₹18.6 lakh crore, growing by 50.4% y-o-y. The five states in the South hold almost 75% of that amount. 
    
2. The gold loan is the second-most widely used retail borrowing product in India, only falling behind home loans.

South India Drives Indian Gold Loan Market Explosion in FY26

In FY26, the Indian gold loan market recorded explosive growth. The total outstanding went above ₹18.6 lakh crore, which shows an increase of 50.4%. Higher prices and growing credit demand were among the factors driving such dynamics. 

However, the distribution of gold loan adoption across regions is skewed. People living outside South India have limited access to gold loans because of low demand and few lending opportunities in other parts of the country.

Which States Dominate?

South Indian states own almost 75% of the outstanding gold loan market. The outstanding gold loan debt in the five South Indian states totals ₹13.94 lakh crore, CRIF High Mark reveals. It makes the South Indian region a leader in the market.

It is interesting to note that the most populous state of India, Uttar Pradesh, holds only ₹42,300 crore in outstanding gold loans. The preference for gold jewelry in South India explains the domination in the lending market.

Industry Insights on Market Growth Dynamics

Axis Bank Group Head for Co Lending and Gold Loans, Mohit Jain, highlighted the growing prominence of gold loans, speaking about the current market situation. 

He mentioned, “It has now emerged as the second-largest product in retail lending after home loans. We are witnessing a shift toward higher ticket sizes and more income-generating end uses.”

CRIF High Mark shows that the participation of NBFCs in originations grew sharply over the past two quarters, rising from 20.7% in Q4 FY24 to 31.6% in Q4 FY26. Even though PSU banks dominate by the volume of issued loans, their participation declined from 51.1% to 44.6%.

Conclusion

Nowadays, gold loans are no longer the last resort for people who need quick money. Instead, a gold loan has become a commonly used financing method. The growth of 50.4% speaks about borrowers’ trust in lenders. However, the regional difference deserves consideration and further improvement.

FAQs 

Why are gold loans rising so fast in India?

Gold loans in India grew rapidly because gold prices increased and more people started using gold loans for business, emergencies, and short-term funding. The total outstanding gold loans reached ₹18.6 lakh crore in FY26.

Why does South India dominate India’s gold loan market?

South India dominates the gold loan market because gold ownership and jewelry purchases are traditionally much higher in the region. Tamil Nadu, Andhra Pradesh, Karnataka, Telangana, and Kerala together account for almost 75% of India’s outstanding gold loans.