Gold loans now account for 41 per cent of all fresh retail loan sanctions in FY 26. Many big NBFCs joined this market as gold prices touched a peak of ₹1.64 lakh in January 2026. Borrowers prefer these loans because they offer fast, reliable, and dignified credit for families.
For most Indians gold is the most trusted asset with store of value. It is now becoming their most dynamic conduit of credit. This transformation has been well-captured in the article ‘Big NBFCs join the gold loan mela’ (businessline, September 14, 2026). Well-known NBFCs built on home loans, auto finance and consumer credit have entered a segment long dominated by specialists like Muthoot Finance and Manappuram Finance. The logic is simple: Gold loans, with liquid security, swift recovery and low default rate, are preferred to stress prone unsecured loans and microfinance.
Already transformed market
While the aforementioned article traces an emerging trend, the Experian India Gold Loans in Transition report (2026) depicts the structural reality of gold loan landscape. Gold loans now account for 41 per cent of all fresh retail loan sanctions in FY 26, as against 20 per cent just two years ago. Annual growth rate of new gold loans is 84 per cent which is more than double the 36 per cent recorded across all retail credit products combined. RBI data also confirm the momentum in the growth of jewel loans of NBFCs: their annual jewel loan growth rate identified at 43.9 per cent in July 2025.
Gold prices have been the underlying reason. Prices touched a peak of ₹1.64 lakh in January 2026 from ₹69,000 per 10 grams in July 2024. Families do not need to own more gold to borrow more – rising prices do the work. In spite of the slight moderation in prices to around ₹1.54 lakhs recently, the momentum continues, with borrowers preferring gold loans.
The borrowers of the pledge
According to the Experian report, in early 2026, 76 per cent of new gold loans went to repeat customers who have experienced fast, reliable and dignified gold loan services. Such customers include vulnerable segments representing small traders/business owners, farmers, women, etc. For such segments gold loans are the most preferred choice in spite of many other funding options.
The gender dimension is particularly significant. Among the new borrowers, female borrowers account for a share of 38 per cent, making gold loans as the most gender-balanced secured retail product. In Indian households, gold ornaments carry the weight of familial trust and emotional bonding — marriage sthreedhanam, inherited across generations, held as financial security which cannot be replicated by any form of savings.
Women pledge gold, their most valuable asset, only in case of genuine needs, and redeem it at the earliest possible time. This emotional bond is the reason behind the low default rates. Within Priority Sector Gold Loans, the share of women borrowers doubled to 21 per cent in FY26 from 10 per cent in FY23, which is an unnoticed but remarkable advance in women’s economic empowerment.
The risk
Non-performing assets (NPAs) in the category of jewel loans have fallen to 0.2 per cent in March 2026 from 0.4 per cent in March 2023. Much of this fall is attributed to the denominator effect: the volume of loans has increased rapidly and with the stable volume of bad accounts, the proportion of NPA has shrunk. The real risk lies at the borrower level. Customers holding gold loans along with personal loans exhibit higher repayment stress.
Borrowers with five or more gold loans had 1.1 personal loan accounts in December 2025, as against 0.4 per cent in December 2022, indicating the rising total indebtedness which are not captured exactly by product-level NPA figures. Nearly half of all gold loans in FY26 Q3 are less than three months old, implying repeated pledging and redeeming done by the same borrowers — which hides the pattern of rolling financial stress.
What’s ahead?
An estimated 25,000 tonnes of gold are with India’s households. Voluminous gold loans reflect that such huge wealth is being drawn steadily into the formal financial system, and the entry of large NBFCs will further accelerate the process. The opportunity is real: faster credit access for vulnerable sections of society in geographies long underserved by formal lending.
A full credit cycle in gold lending has not yet been tested. Lenders perceive gold loans as profitable and safe in a period of continuously rising gold prices. A downturn is yet to be witnessed. The new entrants are still building the local expertise and customer trust that specialists like Muthoot have spent decades earning.
India’s gold loan market’s next chapter belongs to those players who do not just depend upon aggressive marketing but rely on careful monitoring of jewel loans. The mela is in full swing. The government and the RBI must keep pace.
Alamelu is Senior Professor (Retired), and Thenmozhi is Aspiring Research Scholar, Department of Banking Management, Alagappa University, Tamil Nadu