Gold Loan: In India, there has been a huge increase in the rate of loan loans in exchange for gold loans. By July 2025, the gold loan has increased by 122 percent, which is about three times more than the 44 percent increase recorded in the same period last year. According to the September 2025 Bulletin of the RBI, by July 2024 last year, the banking and financial sector gave a gold loan of ₹ 1,32,535 crore, which has increased to ₹ 2,94,166 crore by July this year.
Compared to other assets, gold loans have the highest speed. The loan has increased by only 3.3 percent in the loan in lieu of shares and bonds and 16.7 percent in the loan in lieu of fixed deposits. Let us tell you what is the real reason behind this
1. Historical boom in gold prices
The biggest reason for this explosion in gold loans is a huge jump in gold prices. The deep faith of Indians about gold and the tendency to consider it a safe investment has contributed to it. On December 31, the price of gold was ₹ 78,950 per 10 grams, which increased to ₹ 1,17,700 on 26 September 2025. Due to this bounce, the borrowers are now getting more debt in exchange for less gold, making it an attractive option to get money immediately.
2. RBI’s ‘Ankush’ on Unsecured Loan
One of the main reasons for increasing the popularity of gold loans is that RBI has increased the ‘risk weight’ on a personal loan such as unprotected loans. This means that banks have to preserve 125 percent of the amount given in the form of individual loans. Due to this rule, banks are no longer promoting personal loans, due to which the general public is turning to a safe gold loan for quick and easy financing.
3. Easy access and digital processes
Easy availability and sharp digital process of gold loan is making it even more convenient to customers. Non-banking financial companies (NBFCs) and small finance banks are rapidly increasing their reach in rural and town areas, due to which people are now taking gold loans even in small villages. A significant change has also been observed that the economically backward classes who used to take loans from microfinance institutions (MFIS) are now preferring gold loans, which has reduced the tendency to take loans from MFIS.
The impact of RBI rules and further path
Given this growing market of gold loan, RBI has also changed the rules twice in April and June to reduce risks. Despite this, the gold loan continues to increase, as the lenders are promoting it fiercely to capitalize on the benefits of this business.
According to RBI’s Financial Stability Report (FSR), the gold loan market in 2024 was ₹ 7.1 lakh crore, which is expected to be doubled to ₹ 14.19 lakh crore by 2028. However, along with this growth, signs of increase in non-performing assets (NPAs) in the Gold Loan Segment are also clear, which may be a matter of concern for future financial stability.