Gold lends most glitter to loans with 125% surge
Gold loans have seen a remarkable surge, growing by 125 percent in a year. This boom is attributed to rising gold prices, making it a more valuable collateral. Banks have now overtaken NBFCs in the gold loan market share. Other loan segments like vehicle and personal loans also showed growth, while consumer durable loans contracted.
Bank loans against gold surged 125% as of November-end from a year earlier, show latest Reserve Bank of India data, as a rally in the yellow metal increased its collateral value and enabled borrowers to take larger loans.
While vehicle loans rose 11% on the back of higher demand for passenger and commercial vehicles following a cut in goods and services tax, consumer durable loans contracted, likely due to festive season demand ending in October.
Over the past year, gold loans have been the fastest-growing portfolio, with growth doubling in the last six months on a year-on-year basis, RBI data show. Outstanding gold loans jumped from ₹898 crore in November 2023 to ₹1.59 lakh crore by November 2024, and further to ₹3.5 lakh crore as of November 2025.
Gold prices rose nearly 64% in 2025, reaching about ₹1.35 lakh per 10 grams of 24 karat gold. Manish Mayank, head, gold loan business, at IIFL Capital highlights the change over the past year.Banks Overtake NBFCs
"The sharp growth in gold loans reflects a structural shift in how small entrepreneurs and households access credit," said Mayank. "Gold loans meet urgent, short-tenure working capital needs with speed, transparency and minimal documentation. The secured nature of the product has created a win-win, lowering risk for lenders while offering borrowers affordable, flexible credit without disrupting cash flows."
Non-banking finance companies (NBFCs) expanded their gold loan book, with outstanding loans at Rs 3 lakh crore, according to industry estimates. Banks, meanwhile, overtook NBFCs in gold loan market share, holding 50.35%, with the remainder accounted for by finance companies, according to RBI's latest Trends and Progress report.
Muthoot Finance, Manappuram and IIFL Finance are among the largest gold loan financiers.
The combined gold loans of banks and NBFCs had a 5.8% share in total outstanding loans as of September-end, RBI's Financial Stability Report showed.
Vehicle loans climbed to ₹6.8 lakh crore by end of November, aided by the GST cut and festive offers. Other segments posting strong growth included personal loans (12.7%), commercial real estate (12.5%) and services (11.7%). Loans to NBFCs and industry rose 9.5% each.
Within personal loans, some sub-categories moderated as their share in outstanding loans dipped. The share of home loans fell from 16.66% to 16.43% year-on-year, while credit card outstanding declined from 1.66% to 1.52%.