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Record gold prices lift loan demand: Is it time to borrow?India’s gold loan market surged 91% in FY26 Q3, with NBFCs gaining share and banks expanding focus. Gold loans now make up 9.7% of retail lending, driven by high gold prices.By Anshul  February 18, 2026, 11:56:11 AM IST (Published)4 Min ReadIndia’s gold loan market is expanding at a pace that now outpaces most other retail credit segments, as high gold prices and tighter rules on unsecured lending push more borrowers toward collateral-backed options.

Data by Experian shows new gold loan sourcing value grew about 91% year-on-year in FY26 Q3, with consistent expansion over the last six quarters. Quarter-on-qsuarter growth accelerated to 42% in FY26 Q3 from 28% in the preceding comparable quarters.

The overall gold loan portfolio recorded roughly 48% year-on-year growth as of December 2025.

CRIF High Mark’s CreditScape Report places the gold loan portfolio outstanding at ₹15.6 lakh crore as of November 2025, up from ₹11 lakh crore a year earlier — a 41.9% rise. Gold loans now account for 9.7% of the retail lending portfolio, compared with 8.1% a year ago.

Active gold loan accounts stood at 902.6 lakh, up 10.3% year-on-year, while delinquency levels remained contained, with PAR 31–90 at 1.2% and PAR 180+ at 0.3%.

Funding costs define lender strategy

Umesh Mohanan, Executive Director & CEO at Indel Money, says structural differences in funding explain pricing gaps between banks and non-banking finance companies (NBFCs).

“In gold loan business, margin (spread) is not same for banks and NBFCs. It varies from companies to companies. Banks have access to low-cost funds but NBFCs often rely on banks for capital or raise from the market. Naturally, NBFCs have to pay additional margin for bank funding,” he says.

He adds that regulatory curbs on unsecured lending have reduced bank exposure to NBFCs and microfinance institutions, affecting NBFC profitability. Even so, competition has not sharply lowered customer rates.

“Interest rates of Scheduled Commercial Banks (SCB) are in a particular range while NBFC rates are a bit higher than that,” Mohanan says, noting that banks can classify certain gold-backed agriculture loans under priority-sector lending and access cheaper funds.

Despite that advantage, NBFCs have gained ground.

Experian data shows their share of sourcing value rising to 39% in FY26 Q3 from 28% in FY24 Q3, while public sector banks’ share moderated to 36%. NBFCs remain more active in lower ticket sizes and have maintained the lowest delinquency levels across lender categories.

Demand drivers: Price, policy, perception

Mohanan says demand growth varies across lenders, typically between 15% and 30% this financial year, depending on credit growth and liquidity conditions.

“We are witnessing a growth of roughly about 40%+ for this Q3,” he says.

He attributes the rise to three shifts. First, social attitudes have changed: “Gold loan has become very common like any other form of credit as people are now willing to pledge their gold jewellery. It is not a taboo now.”

Second, elevated gold prices increase borrowing capacity against smaller quantities of jewellery. Third, restrictions on personal loans, microfinance and credit card-based lending have channelled borrowers toward secured products.

“RBI’s tight regulation on unsecured lending has restricted avenues like micro finance, personal loans and credit card based loans, which in turn becomes a positive contributor to the collateral-based loans like gold loans,” he says.

He also highlights the scale of untapped potential. India holds household gold reserves of up to 34,000 tonnes, but only about 15% has entered the pledge market, and just 37% of that market is controlled by organised players.

Sharpening competition, evolving products

Banks, once less focused on gold loans, are now expanding in the segment. “Earlier, banks were not very keen on gold loan business. Now they are actively focusing on it due to gold price surge and high profit margin,” Mohanan says.

For NBFCs, gold lending remains core.

To stay competitive, they are adding features and collaborating with fintech firms to improve compliance and customer experience

. Recent regulatory norms covering loan-to-value ratios, storage standards, purity testing and auction procedures have also strengthened transparency and oversight.

Borrow now or wait?

Mohanan refrains from calling a market top or bottom.

“There is no ideal time to avail any loan. It depends upon one’s requirement,” he says. While gold loans were once primarily used during financial stress, he notes they now serve broader consumption and lifestyle needs.

He points out that gold prices respond to geopolitical tensions, economic trends, US dollar strength, Federal Reserve policy and equity market sentiment

. “At this point, we can only assume that gold price may stay elevated for a longer time due to its traditional safe haven demand.”

For borrowers, the choice hinges less on predicting gold prices and more on comparing costs, tenure and repayment capacity. With strong growth, stable asset quality and shifting market share, gold loans have moved firmly into the mainstream of India’s retail credit landscape.Continue ReadingNote To ReadersDisclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.Tagsgoldgold loansGold Pricesgold rates