Good day, I’m Priyanka Salve, writing to you from Singapore.
Welcome to the most recent version of Inside India — your one-stop vacation spot for tales and developments from the world’s quickest rising giant economic system.
This week, I unpack what’s driving the speedy surge in gold‑mortgage development on the earth’s second‑largest bullion market. Loans towards gold are a multibillion‑greenback business in India, powered by households holding $5 trillion in bullion.
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The large story
Indian households are sitting on a mountain of gold.
They personal greater than 34,000 tons of the yellow steel, as per a Morgan Stanley report from October final yr, with Kotak Mahindra Financial institution pegging its worth at about $5 trillion.
That huge reserve is now powering one of many fastest-growing lending segments in India. As different types of shopper credit score sluggish, gold loans have surged, pushed by tighter banking guidelines for unsecured loans, a pointy rally in world gold costs, improved entry, and maybe a rising monetary stress amongst households.
Whereas about 90% of Indian households’ hoardings are nonetheless mendacity idle, in line with Shripad Jadhav, enterprise head of gold loans at Kotak Mahindra Financial institution, gold-backed lending is starting to reshape India’s retail credit score panorama, even drawing some world traders.
World non-public fairness agency Bain Capital has made a daring guess on loans towards gold, with plans to accumulate as much as 41.7% stake in Manappuram Finance, India’s second‑largest gold mortgage supplier.
The deal, authorised by the Reserve Financial institution of India final month, indicators how worldwide traders see alternative within the nation’s most conventional however underutilized asset.
In December final yr, Japanese monetary behemoth MUFG mentioned it was buying a 20% stake in Indian shadow banking agency Shriram Finance, which plans to double down on loans towards gold.
RBI information reveals gold loans greater than doubled in a single yr, rising to 4 trillion rupees ($43.3 billion) in January from 1.75 trillion rupees a yr earlier. Gold-backed lending is now the biggest retail mortgage phase within the nation after residence and automobile loans, in addition to the fastest-growing retail credit score class.
The precise measurement of gold loans in India is estimated to be 14 trillion rupees, mentioned Yan Wang, chief rising market strategist at Canadian agency Alpine Macro, including that the RBI information solely captures private gold loans from sure industrial banks.
Non-banking monetary corporations, or NBFCs, account for 45%–50% of gold mortgage quantity, in line with a Macquarie report from final month — which isn’t captured by the RBI.
Gold rush
As India’s central financial institution tightened the foundations round unsecured lending in late 2023, it lower off entry to this line of credit score for a lot of small and personal enterprise debtors, Hanna Luchnikava-Schorsch, head of Asia-Pacific economics at S&P World Market Intelligence, instructed me.
“Private loans development has slowed from a median of 30% in six months to December 2023 to 12.2% in 2025,” she mentioned. Throughout the identical time, world gold costs have soared.
From 2024 so far, gold has gained greater than 140% to cross $5000 per ounce, hitting a number of information this yr.
Larger gold costs improve the worth debtors can unlock with the identical quantity of steel — making gold loans extra interesting, Luchnikava-Schorsch mentioned.
Traditionally, demand for loans towards gold was pushed by South Indian states and the semi-urban market, particularly amongst agricultural communities, consultants mentioned.
Now, that development is broad‑primarily based throughout India, says Kotak Mahindra Financial institution’s Jadhav, as center‑class in addition to high-net-worth people in large cities are utilizing gold loans to fund time‑delicate monetary wants.
NEW DELHI, INDIA – OCTOBER 18: Individuals shopping for the gold and silver jewellery on the event of Dhanteras at PP Jewellers, Karol Bagh on October 18, 2025 in New Delhi, India.
Hindustan Occasions | Hindustan Occasions | Getty Photos
The largest beneficiaries of this demand for gold loans have been NBFCs equivalent to Manappuram Finance and business chief Muthoot Finance. Their shares have risen 24% and 47%, respectively, during the last yr, outpacing the benchmark Nifty 50 index by a large margin.
“Most NBFCs can disburse a mortgage inside an hour of a buyer strolling right into a department,” mentioned Shreya Shivani, an NBFC analyst at Nomura.
Even an individual with a “poor” credit score rating who owns good high quality gold can get a mortgage at a a lot better lending price in comparison with unsecured private loans, she mentioned. Whereas that widens entry to credit score, it additionally raises questions.
A quickly rising mortgage phase that bypasses conventional credit score assessments might point out stress within the economic system, with Macquarie’s report additionally attributing folks feeling financially squeezed, and incomes not retaining tempo with prices, among the many causes driving the increase in gold loans.
Shripad says that the rise in gold loans is “a marker of monetary maturity” as individuals are monetizing the valuable steel and utilizing it as a hassle-free, fast, and low‑value credit score line.
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