Archive · 26 Jan 2026
India's Gold Loans Surge Amid High Prices
Banks in India are lending more money using gold as security because gold prices are very high.
This is good for banks because people are more likely to pay back loans when they use their gold.
Big companies that lend money against gold are also seeing a lot more business.
At the same time, the government might need to put more money into a special fund to pay back people who invested in gold bonds.
These bonds are being returned to investors at much higher prices than when they were bought.
The government hasn't issued new gold bonds in a while because gold prices are so high.
Outstanding gold loans for SCBs reached ₹3.58 lakh crore in November 2025, up 125% year-on-year.
Credit card and other personal loans grew by only 2.4% and 9% respectively over the same period.
Banks are rebalancing their portfolios and increasing focus on gold loans due to the global slowdown and high gold prices.
The increase in gold prices allows banks to lend more money for the same quantity of gold within RBI's LTV limits.
Major gold loan NBFCs like Muthoot Finance, Manappuram Finance, and IIFL Finance saw significant increases in their gold AUM.
The Union Budget is likely to provide a higher allocation to the Gold Reserve Fund in both the revised estimates (RE) for FY26 and the budget estimates (BE) for FY27 due to surging gold prices and SGB redemptions.
Fourteen tranches of the 2017–18 series were redeemed during the current fiscal, with redemption prices ranging between ₹9,486 and ₹13,486.
The government has not issued fresh SGB tranches since FY24 and has virtually ruled out future issuances due to high redemption costs.
- Who
- Scheduled commercial banks (SCBs), major gold loan NBFCs (Muthoot Finance, Manappuram Finance, IIFL Finance), and the Indian government
- What
- Increase in gold loans and potential higher allocation to the Gold Reserve Fund due to surging gold prices and SGB redemptions
- When
- As of November 2025 and the quarter ending September 2025, with budget revisions expected in FY26 and FY27
- Where
- India
- Why
- Due to the global slowdown, high gold prices, the need to rebalance portfolios, and mounting SGB redemption costs
- Outstanding gold loans (Nov 2025)
- ₹3.58 lakh crore
- Year-on-year increase in gold loans
- 125%
- Credit card loan growth (YoY)
- 2.4%
- Other personal loan growth (YoY)
- 9%
- Banks' market share in gold loans
- 55% (estimated)
- Gross NPA for gold loans (Sep 2025)
- 0.8%
- Muthoot Finance gold AUM (Q3 2025)
- ₹13.2 lakh crore
- Manappuram Finance gold AUM (Q3 2025)
- ₹31,505 crore
- IIFL Finance gold AUM (Q3 2025)
- ₹34,577 crore
- Gold Reserve Fund BE (FY26)
- ₹700 crore
- Gold Reserve Fund RE (FY25)
- ₹28,000 crore
- Gold Reserve Fund BE (FY25)
- ₹8,550 crore
- SGB redemption price range (2017–18 series)
- ₹9,486–13,486
- SGB redemption price (FY19 series, 5th tranche)
- ₹14,853
- Current gold price
- ₹16,000+ per gram
