More Indians than ever turned to their jewellery for financial support in the financial year ending March 2025. Loans backed by gold more than doubled in just 12 months — jumping 103 % from a little over ₹1 lakh crore to nearly ₹2.1 lakh crore, as per the latest Reserve Bank of India (RBI) data. This made gold loans the fastest-growing loan segment even as overall credit growth in the banking sector cooled.
This sharp rise didn’t happen in isolation. A key reason was the RBI’s directive in 2023 that required banks to reclassify several agricultural loans as gold loans. Rural borrowers often pledge gold for farm-related credit, which banks prefer to tag as agricultural loans — partly because farm credit benefits from lower interest rates and relaxed repayment norms.
Another push came when the RBI tightened norms for certain large non-bank finance companies (NBFCs), effectively diverting gold loan customers towards mainstream banks. Add to this the steady rally in gold prices, and borrowers found themselves eligible for larger sums against the same ornaments.
Despite the gold rush, overall bank credit grew at a slower pace. Total outstanding bank credit stood at ₹182 trillion as of March 2025. Adjusting for the impact of the HDFC-HDFC Bank merger, credit growth for FY25 cooled to 12 %, down from 16.3 % in the previous year.
Within that, gold loans expanded their share significantly. They now make up 1.1 % of total bank credit, up from just 0.6 % a year ago — a sign of how quickly the segment has grown.
While gold-backed loans zoomed ahead, lending to large industries remained subdued. Growth in this segment slowed slightly to 6.2 %, from 6.4 % in FY24. The proportion of total credit going to industry has dipped to 21.5 %, suggesting limited appetite or scope for expansion in this space.
In contrast, the services sector absorbed a bigger slice of credit — 28.3 % of the total — while personal loans continued their steady rise, now accounting for 32.6 % of all credit.
Among personal loan categories, housing loans held firm, making up 16.5 % of personal credit with a portfolio size of ₹30.1 lakh crore. Unsecured personal loans (labelled as ‘other personal loans’) grew 7.9 %, while loans for consumer durables slipped 1.3 % to ₹23,402 crore — hinting at a more cautious stance from banks towards unsecured lending.
Interestingly, the only other retail category to see double-digit growth — apart from gold loans — was loans against securities, which rose 18.7 % to ₹10,080 crore.
