Hello, I am Priyanka Salve, writing to you from Singapore.
Welcome to the latest edition of Inside India — your one-stop destination for stories and developments from the world’s fastest growing economy.
This week, I unpack what’s driving the rapid rise in gold loan growth in the world’s second-largest bullion market. Gold loans are a multi-billion dollar industry in India, driven by households worth $5 trillion.
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Great story
Indian houses sit on a mountain of gold.
According to a Morgan Stanley report from October last year, they own more than 34,000 tonnes of the yellow metal, with Kotak Mahindra Bank valuing it at around $5 trillion.
That vast reserve is now powering one of the fastest-growing credit segments in India. As other forms of consumer credit have slowed, gold loans have been boosted by tighter banking regulations for unsecured loans, a sharp rally in global gold prices, improved access and perhaps rising financial stress among households.
According to Shripad Jadhav, business head of gold loans at Kotak Mahindra Bank, while nearly 90% of Indian households’ hoardings are still empty, gold-backed lending is beginning to reshape India’s retail credit landscape, even attracting some global investors.
Global private equity firm Bain Capital has made a bold bet on gold loans, planning to acquire up to 41.7% stake in Manappuram Finance, India’s second largest gold loan provider.
The deal, approved by the Reserve Bank of India last month, indicates how international investors see an opportunity in the country’s most traditional but underutilized asset.
In December last year, Japanese financial giant MUFG said it was acquiring a 20% stake in Indian shadow banking firm Shriram Finance, which plans to double its lending on gold.
Gold loans have more than doubled in a year, rising to 4 trillion rupees ($43.3 billion) from 1.75 trillion rupees in January, according to RBI data. Gold-backed credit is now the largest retail credit segment in the country after home and auto loans, as well as the fastest growing retail credit category.
The true size of gold loans in India is estimated at 14 trillion rupees, said Yan Wang, chief emerging market strategist at Canadian firm Alpine Macro, adding that the RBI data only captures individual gold loans from some commercial banks.
Non-banking finance companies, or NBFCs, account for 45%–50% of the gold loan volume, according to a Macquarie report from last month – which is not seized by the RBI.
Gold rush
As India’s central bank tightens unsecured lending rules at the end of 2023, it has cut access to this credit for many small and private business borrowers, Hannah Luchnicava-Schoersch, head of Asia-Pacific economics at S&P Global Market Intelligence, told me.
“Growth in personal loans has slowed from an average of 30% in the six months to December 2023 to 12.2% in 2025,” he said. At the same time, global gold prices soared.
From 2024 till now, Gold Gained more than 140% to cross $5000 per ounce, hitting several records this year.
Higher gold prices increase the value borrowers can unlock with the same amount of metal — making gold loans more attractive, Luchnicava-Scorch said.
Historically, loan demand for gold has been driven by southern Indian states and the semi-urban market, especially agricultural communities, experts said.
Now, that growth is broad-based across India, says Kotak Mahindra Bank’s Jadhav, as middle-class and high-net-worth individuals in big cities are using gold loans to fund time-sensitive financial needs.
NEW DELHI, INDIA – OCTOBER 18: People buy gold and silver jewelery during Dhanteras at PP Jewelers in Karol Bagh on October 18, 2025 in New Delhi, India.
Hindustan Times | Hindustan Times | Getty Images
The biggest beneficiaries of this demand for gold loans are NBFCs Manappuram Finance and industry leader Muthoot Finance. Their shares have risen 24% and 47% respectively in the past year, outperforming the benchmark Nifty 50 index by a wide margin.
“Most NBFCs can disburse loans within an hour of a customer walking into a branch,” said Shreya Shivani, NBFC analyst at Nomura.
He said even a person with a “poor” credit score who owns high-quality gold can get a loan at a better loan rate compared to unsecured personal loans. While it expands access to credit, it also raises questions.
A fast-growing loan segment that bypasses traditional credit assessments points to pressures in the economy, Macquarie’s report said, citing people feeling financially squeezed and incomes not keeping pace with spending, among the reasons behind the boom in gold loans.
Shripad says the rise in gold loans is a “mark of financial maturity” as people are monetizing the precious metal and using it as a hassle-free, quick and low-cost line of credit.
Must know
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India’s US-Israeli leanings are testing its relationship with Iran. Millions of barrels of oil flow to China through India’s Strait of Hormuz New Delhi’s deepening ties with the US and Israel – Tehran’s old ally – have yet to secure safe passage for its ships stranded in the critical waterway as ties with Iran sour.
India’s consumer inflation has risen for the fourth consecutive month. India’s consumer inflation rose to 3.21% in February, up from 2.75% in the previous month, but in line with the expectations of economists polled by Reuters.
is coming
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March 24: India HSBC manufacturing and services flash PMI.
