Why gold loans are India's fastest credit segment

Gold loans have become the fastest-growing secured credit segment in India, with originations rising 37% year-on-year in the June quarter, according to TransUnion CIBIL data. The pace outstrips home loans (13%) and auto loans (15%) for the same period.

Bhavesh Jain, MD and CEO of TransUnion CIBIL, attributed the growth to gold's liquidity and borrower preference for secured debt. "People are using gold loans as a quicker cash option," Jain said. The average ticket size has also crept higher, though lenders are keeping loan-to-value ratios conservative at 75% or below.

Banks and non-bank lenders have expanded gold-loan branches and marketing in the past year, chasing borrowers who want same-day disbursal without the documentation burden of home or auto loans. The segment's delinquency rates remain below 2%, giving lenders room to grow.

TransUnion CIBIL's data showed gold-loan portfolios across lenders rose 28% in the June quarter versus a year earlier. The surge comes as households hold record volumes of gold, much of it bought during the pandemic's price dip. Lenders are betting those reserves will keep feeding loan growth for the rest of the fiscal year.

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