Have Rising Gold Prices Fueled the Gold Loan Craze? The Market Reaches Record Levels..
The gold loan business in India has witnessed rapid growth during the financial year 2026. Driven by rising gold prices and easy access to credit facilities, people are increasingly gravitating towards gold loans. According to a report by Experian, new gold loans surged by 115% in the fourth quarter of FY26, reaching a total of ₹7.6 lakh crore. Meanwhile, the total Gold Loan AUM (Assets Under Management) grew by 47% to reach ₹11.9 lakh crore. Experts state that in FY26, gold loans emerged as the fastest-growing segment within the secured lending sector. People are now prioritizing gold loans as a means to access quick funds without the burden of extensive paperwork.
**Increase in Average Loan Size**
According to the report, the average ticket size of gold loans has also risen significantly. While the average gold loan amount availed stood at ₹1 lakh in FY24, it climbed to ₹1.7 lakh in FY26. Although home loans remain the largest lending category—with an average size of approximately ₹33.5 lakh—gold loans have surged ahead in terms of growth momentum.
**Gold Loans Outpace Personal Loans**
Rising gold prices have further bolstered the gold loan segment. Given that these are collateral-backed loans, both banks and NBFCs view them as a secure lending avenue. Consequently, gold loans have surpassed unsecured lending products such as personal loans and credit cards. According to the report, the market share of NBFCs rose from 28% in the fourth quarter of FY25 to 40% in the fourth quarter of FY26. Conversely, the market share of public sector banks declined to 34%. Private sector banks have intensified their focus on gold loans exceeding ₹3 lakh. Additionally, an improvement has been observed in default rates.
**Why is the Demand for Gold Loans Rising?**
According to Dr. Renisha Chainani, Head of Research at Augmont, several factors underpin the current boom in the gold loan market. The primary driver is the record-high price of gold, which enables customers to secure larger loan amounts against their gold collateral. On the other hand, the Reserve Bank of India (RBI) has tightened regulations on unsecured loans, prompting people to shift towards secured loans.
The RBI recently raised the Loan-to-Value (LTV) limit to 85 percent for gold loans amounting to up to ₹2.5 lakh. As a result, a larger number of people are now able to access gold loans with ease.
**Market Could Expand Further by FY27**
Experts estimate that the organized gold loan market could reach ₹18 lakh crore by FY27. However, rising NPAs and potential regulatory tightening in the future could impact the pace of this growth. Currently, amidst rising inflation and the need for funds, gold loans are rapidly emerging as an easily accessible financial option for the common man.
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