India's Gold Loan Market Hits ₹18.6 Trillion, Debt Risks Mount

India's gold-loan market reached ₹18.6 trillion in the fiscal year ended March 2026, up 50.4% from a year earlier, according to a TransUnion CIBIL report published in April. That makes it the country's second-largest retail credit segment after housing loans. Its share of retail credit nearly doubled to 11.1% in December 2025 from 5.9% in March 2022.

Two forces drove the surge. Gold prices roughly doubled between March 2023 and early 2026, HDFC Mutual Fund estimated, letting households borrow larger sums against the same jewellery. The average ticket size more than doubled from about ₹90,000 in early 2022 to ₹1.96 lakh by late 2025, TransUnion CIBIL found. At the same time, the Reserve Bank of India raised risk weights on unsecured consumer credit by 25 percentage points to 125% in November 2023. Gold loans were exempt, pushing lenders toward collateral-backed products.

The borrower mix shifted. Prime and above-prime customers accounted for 52% of originations in 2025, up from 43% in 2022, while new-to-credit borrowers fell to 6% from 12%, the same report showed. Women made up 40% of borrowers; rural and semi-urban areas generated 68% of originations. Growth spread beyond the traditional southern stronghold: Rajasthan and Uttar Pradesh posted year-on-year volume growth of 79% and 96%, respectively, according to a Credit Market Indicator report. Muthoot Finance said its assets under management rose 49% year-on-year, with yields of 20.8%, and that nearly 1.1 million borrowers in the ₹10,000–₹30,000 range had exited its system.

Larger Loans, Higher Delinquency Rates

The rapid expansion brought rising borrower indebtedness. Three-quarters of gold loans issued in 2025 went to consumers already carrying more than ₹1 lakh in other debt, up from about 50% in 2022, TransUnion CIBIL said. Average outstanding debt per borrower climbed from ₹1.9 lakh to ₹3.1 lakh over the same period. Borrowers also opened more concurrent gold-loan accounts, on average 2.9 in 2025 versus 2.3 in 2022.

Delinquency rates varied sharply by segment. Borrowers with gold loan exposure above ₹2.5 lakh after origination defaulted at more than double the rate of smaller-balance accounts, according to the same agency. Delinquencies were also higher among customers whose debt was concentrated in gold loans and those with recent repayment issues. The report said borrowers with the highest gold-loan dependence were more likely to see their credit access deteriorate over time.

Price Risk and Regulatory Tightening

Price risk hangs over the segment. Because loan values are tied to pledged jewellery, a sustained decline in gold prices would reduce collateral coverage, slow new lending and increase credit losses. Investor nerves showed in June, when a gold-price correction triggered a selloff in gold financier stocks. Muthoot Finance fell 15.9% over the past month, Manappuram Finance 4.4%, both underperforming the BSE Sensex and the Nifty Bank Index. Muthoot shares are down 24.2% so far in 2026.

Regulators have moved to tighten oversight. In April, the Reserve Bank of India introduced a tiered loan-to-value framework, allowing higher leverage for smaller borrowers while imposing stricter limits on larger loans. The rules also require lenders to assess borrowing at the customer level, making it harder to circumvent limits through multiple loans across institutions. The government is examining the sector's links to gold imports and pressure on foreign-exchange reserves.

The structural tailwind remains large. India's households hold more than 25,000 tonnes of gold, according to HDFC Mutual Fund, and bankers estimate only about 10% has been monetised. The TransUnion CIBIL report that underpins much of this analysis comes from a bureau owned by TransUnion, which is unscored on AlphaScala's proprietary system. For context on how gold prices drive outcomes, see the gold profile.