Stories
Gold Loans Surge in India as Borrowers Pledge Jewellery Instead of Selling
- •Gold loans are rapidly growing in India, with borrowers increasingly pledging jewellery for funds rather than selling it, a trend accelerating in 2026.
- •Credit against gold jewellery by NBFCs rose 68.5% year-on-year in July 2026, while bank credit increased by 88.1% year-on-year.
- •Rising gold prices have significantly boosted borrowing capacity, allowing higher loan amounts for the same quantity of gold.
- •Gold loans offer a way to access funds for short-term needs without selling emotionally and financially valuable gold, with collateral returned upon repayment.
- •The RBI has standardized gold loan rules, introducing new LTV limits and a stronger regulatory framework to enhance consistency and accessibility.
Key Questions Answered
A major driver behind the gold loan surge is the substantial increase in domestic gold prices during 2026, which rose by 59% in Q2 compared to the previous year. Higher gold prices increased borrowers' loan-to-value capacity, allowing them to secure larger loan amounts against the same quantity of jewellery without having to sell their cherished assets.
The RBI's Lending Against Gold and Silver Collateral Directions, 2025 introduced standardised requirements covering valuation, assaying, loan-to-value (LTV) limits, and collateral release. For consumption loans, the framework allows maximum LTV ratios of 85% for loans up to Rs. 2.5 lakh, 80% for loans between Rs. 2.5 lakh and Rs. 5 lakh, and 75% for loans exceeding Rs. 5 lakh.
At the end of July 2026, outstanding gold-backed credit reached approximately Rs. 3.54 lakh crore for NBFCs and Rs. 5.52 lakh crore for banks. Credit against jewellery by NBFCs grew by 68.5% year-on-year, while bank credit against gold jewellery surged by 88.1% year-on-year.
