For decades, gold has occupied a unique position in Indian households not merely as jewellery or an investment, but as a symbol of financial security, cultural continuity, and long-term wealth preservation. India is estimated to hold nearly 25,000 tonnes of household gold, valued at over ₹126 lakh crore, making it one of the largest private gold reserves in the world.
Traditionally, this vast wealth remained largely dormant, accessed only in times of distress through gold loans viewed as a last resort financing option. Indian households are increasingly recognising the opportunity to reframe gold loans not as a necessary credit mechanism, but as a calculated approach to managing liquidity without having to part ways with precious assets. This is a greater paradigm involving the shifting situation for consumers to deal with evolving concepts of secured funding products.
From distress borrowing to planned liquidity
While in the past, gold loans were typically linked to a state of urgency, whether in the context of health, agricultural, or even income squeeze, in the present scenario, the context for gold loans has significantly grown in scope and intent. While in the past, borrowers tended to adopt gold loans in a more ad hoc manner, the present pattern indicates a more considered and informed attitude to borrowing.
Recent data has also reflected this trend. Observably, in its September 2025 edition, the CRIF High Mark report has stated that in Q2 for Financial Year 26, the Indian Retail and Consumption Loan Portfolio has recorded a growth of 18 per cent Y-O-Y, whereas gold loans grew by 35.8 per cent, making them the highest growing segment in Indian Retail Credits. The expansion is also evident in portfolio trends.
RBI data shows that gold loan portfolios increased from ₹89,898 crore in November 2023 to ₹1.59 lakh crore by November 2024, and further to approximately ₹3.5 lakh crore by November 2025 nearly doubling within a year. This rapid growth reflects both higher gold prices and increased borrower confidence in formal credit channels.
Gold loan market: A large and largely untapped opportunity
However, the amount of monetised household gold through formal lending channels is only about 5.6 per cent. This again underscores the great opportunities awaiting the formal market of gold finance. With the need for credit increasing for the household economy and the micro entrepreneur, the opportunity for gold finance looks attractive both as a counter cyclical option and as a means of managing risk.
However, while banks have progressively grown their gold loan offerings, the role of Non-Banking Financial Companies, which initially spearheaded the cause, should not be forgotten, especially when it comes to promoting the cause of gold loans at the retail household or small business owner level.
Why NBFCs Are Central to the Shift
NBFCs have been one of the primary contributors in the mindset change. The simplified documentation process, faster disbursement, flexible repayment systems, and the transparent valuation of the loans have made the gold loan accessible to the borrower. For many families, there exists an opportunity through the NBFC, a state of regulatory access that does away with the need for alternate credit sources. However, most importantly, the gold loans extended by the NBFC segment are becoming increasingly aligned with sound lending standards, where the borrowers can retain ownership of the gold, thereby fostering a sense of trust with the segment.
Policy and regulation strengthen confidence
The Reserve Bank of India has implemented clear guidelines around loan-to-value (LTV) ratios, valuation standards, and risk management practices. These measures have enhanced consumer protection while enabling lenders to manage exposure effectively. Such regulatory clarity has helped formal gold loans gain legitimacy as a mainstream financial product, especially at a time when unsecured credit is witnessing increased scrutiny.
Changing consumer mindsets: Gold as productive capital
Central to all of this, of course, is a significant shift in terms of consumer thinking, where consumers no longer view gold as being ‘idle wealth laid away as an emergency fund,’ but as being ‘productive capital that can support their financial goals without being sold.’ This phenomenon also receives corroboration from macro-economic indicators. The rise in price of gold is having a positive impact on the wealth of the people. A rise of ₹117 lakh crore is estimated to have been added to the wealth of the people of India because of an increase in the price of gold over a short span of a year. The rise in price of gold results in an increase in its attractiveness as a collateral for short-term finance.
Gold loans as a smart liquidity solution
In today’s market, the decision to take a gold loan can be justified for various reasons, as compared to other loans, which involve lower interest rates, a lower tenure period, do not impact the credit score, and, most importantly, the ownership does not move out of one’s own hands in the form of gold. It seems that the more the credit infrastructure develops and matures in India, the more the gold loans provided through the NBFCs will be a part of the general household planning scenario rather than being a last resort. The traditional and modern approaches being adopted for the gold loans will make the whole scenario a smart move for the modern and financially aware India.
The author is, Director, Arvog
Published on January 25, 2026
