Gold loans grow 128%, outstandings cross 4 lakh crore

MUMBAI: Gold loans are booming. Lending against the yellow metal is expanding at triple-digit rates of 128% year-on-year, propelling personal loans, which in turn underpin the 14.4% overall growth in bank credit as of Jan 31.

Data from RBI on the sectoral deployment of bank credit shows personal loans outpacing all other segments. At 34.5%, they account for about a third of bank credit, followed by services, within which lending to NBFCs is the fastest-growing component. Industrial credit tells a different story. Loans to micro, small and medium enterprises are expanding briskly, while borrowing by large corporates remains subdued.

Outstanding loans against gold jewellery crossed Rs 4 lakh crore for the first time, reaching Rs 4,00,517 crore as of Jan 31. Gold loans account for 9% of incremental bank credit. Between Jan 26, 2024, and Jan 31, 2026, outstanding credit backed by gold jewellery rose by nearly Rs 3.1 lakh crore, an overall increase of about 338% over two years, expanding the portfolio more than fourfold.

Two factors explain the surge: The cost of gold has climbed by 152% in two years. In addition, a regulatory directive requires banks to classify loans secured by gold as gold loans.

Overall, non-food bank credit rose by 14.4% year on-year-as of Jan 31, 2026, compared with Jan 24, 2025. For the financial year to date since March 21, 2025, credit expanded by 12%, translating into incremental growth of Rs 21.8lakh crore in the non-food loan book.