Gold loans have expanded nearly fourfold since March 2022, becoming the second largest retail credit product after home loans, but delinquency risks are quietly building, tied to borrower leverage and repeat borrowing behaviour. This has prompted analysts to call for greater vigil by the Reserve Bank of India (RBI) on the portfolio.
According to a TransUnion CIBIL report, for gold loans originated in the six months ended June 2025, overall delinquency was 1.1 per cent (delinquency being measured as any trade reported as 60 days past due within six months of origination).
But borrowers whose post-origination gold loan outstanding amount exceeded ₹2.5 lakh showed a delinquency incidence of 1.5 per cent, about 2.2 times that of borrowers with lower exposure, at 0.7 per cent. The delinquency was higher at 1.9 per cent for borrowers with five loans.
The report further notes that borrowers with a history of serious delinquency who subsequently rely on gold loans face a significantly higher risk of disengagement from the formal credit system. Their credit-access closure rate was around 1.6 times higher than that of non-defaulting borrowers, suggesting that for a section of stressed borrowers, gold loans may increasingly be functioning as a product of last resort.
According to Suresh Ganapathy, delinquency rates in the gold loan segment are higher for larger ticket size loans as well as loans where there are multiple other loans live. Vintage delinquency rates have gone up for ticket sizes between ₹50,000 and ₹200,000.
So some stress is building up, but overall delinquency rates are still low as of now and loss rates will be low on the gold loan book, he said, cautioning that there is a need to be careful of the growth here as this portfolio is growing at a rapid scale and now forms the second largest part of the retail loan book after mortgages.
“We expect the RBI to be more watchful regarding gold loans. While there has been a spate of regulatory changes, if growth continues at such a rapid pace, there could be a fresh round of restrictions in our view”, said Macquarie Research in a report, adding that while portfolio at risk (PAR) levels are comfortable and eventual losses from gold loan defaults will be much lower than those from personal loans, it will remain watchful of any sharp correction in gold prices, which could impact both growth and recovery potential.
The TransUnion CIBIL report also points to the fact that the average outstanding amount per borrower rose from ₹1.9 lakh in December 2022 to ₹3.1 lakh in December 2025, while the number of borrowers with gold loan exposure above ₹2.5 lakh increased to 14 per cent of total borrowers at the end of 2025, up from 10 per cent in 2022.
“Borrowers with higher existing balances and greater unsecured exposure have also become more prominent at origination, indicating that gold loans are increasingly sitting alongside other forms of credit in borrower wallets”, the report said.
Gold loans have witnessed a compound annual growth rate (CAGR) of over 30 per cent in the past couple of years across the system, more than twice the growth rate of personal loans. It is now the largest category in retail loans after housing, with its share in India’s retail credit portfolio rising from 5.9 per cent to 11.1 per cent by December 2025.
“Much of this growth is explained by higher gold prices, which have doubled over the past couple of years”, the Macquarie report said.
According to TransUnion CIBIL, the growth reflects rising borrower adoption, higher ticket sizes, broader lender participation, and a borrower profile that increasingly includes consumers and women borrowers with more extensive credit histories. Growth in the segment has been especially strong among non-banking financial companies (NBFCs), which increased their share of gold loan balances from 7 per cent in March 2022 to 11 per cent in December 2025, and public sector banks, which increased from 57 per cent to 62 per cent over the same period.
“Is retail under pressure due to rising over-leverage and therefore pledging gold for various consumption requirements? Are income levels being affected and thus impacting consumption ability? Are some of these gold loans being used for stock market investments or speculation? Is the retail segment being opportunistic and cashing in on rising gold prices? We believe it is a combination of all of the above”, the Macquarie report suggested.
According to Bhavesh Jain, managing director and TransUnion CIBIL, “As the gold loan segment expands, lenders’ priority must be to balance growth with prudence. Collateral strength remains important, but it cannot be the sole criterion for evaluating borrowers. Lenders will need to assess total borrower indebtedness, repayment capacity, recent credit behaviour and cross-lender exposure more holistically. Stronger borrower-level loan-to-value checks, risk-based pricing, and closer monitoring of repeat reliance on gold loans will be essential to ensure that this important segment continues to grow in a sustainable and responsible way.”