The gold loan market is growing fast, but new data shows that the rise is coming with higher risks, especially as borrowers take bigger loans and rely on multiple accounts.
loans have grown nearly 3.8 times since March 2022. Their share in the retail credit market has also increased sharply, rising from 5.9% to 11.1% by December 2025. This makes after home loans.
The strong growth in gold loans is being driven by several factors. Faster loan approvals, rising gold prices and easy access through non-banking lenders have made gold loans more popular.
What was once seen as an emergency option is now becoming a regular source of credit for many borrowers.
The total value of new loans has gone up 5.1 times since April 2022. At the same time, the average loan size has more than doubled, rising from Rs 90,000 to Rs 1.96 lakh.
The report also noted that This includes consumers with longer credit histories and more women borrowers.
Data from TransUnion CIBIL shows a clear change in how people are borrowing.
Nearly 48% of new gold loan customers now have outstanding loans of more than Rs 2.5 lakh after taking the loan. This shows a move away from small loans towards larger borrowing.
Higher loan sizes mean borrowers are taking on more debt, which increases the risk if they are unable to repay.
Another key trend is that borrowers are taking multiple gold loans instead of relying on a single loan.
The average number of gold loan accounts per borrower has increased from 2.3 to 2.9. Many borrowers are taking loans from different lenders at the same time.
Among borrowers with more than Rs 2.5 lakh outstanding, around 46% have more than five gold loan accounts. This group is more likely to face repayment issues.
This pattern of repeated borrowing is raising concerns about rising leverage among borrowers.
The report shows that borrowers with higher loan amounts are more likely to default.
Borrowers with more than Rs 2.5 lakh outstanding have a delinquency rate of 1.5%. This is about 2.2 times higher than those with lower loan amounts.
This indicates that as loan sizes increase, the risk for lenders also rises.
The report also found that borrowers with a past record of serious defaults face even higher risk. Their chances of dropping out of the formal credit system are about 1.6 times higher than those who have not defaulted before.
This suggests that for some borrowers, gold loans are becoming a last option when other forms of credit are not available.
Bhavesh Jain, Managing Director of TransUnion CIBIL, said lenders need to be careful as the segment grows.
“As the gold loan segment expands, lenders’ priority must be to balance growth with prudence,” he said.
He added, “Collateral strength remains important, but it cannot be the sole criterion for evaluating borrowers.”
Breaking this down further, he said lenders should look beyond the gold pledged and check the full financial position of the borrower.
“Lenders will need to assess total borrower indebtedness, repayment capacity, recent credit behaviour and cross-lender exposure more holistically,” he said.
The sharp rise in gold loans shows strong demand for easy credit. But the data also points to rising stress, especially among borrowers taking large and multiple loans.
While the sector continues to grow, lenders may need to tighten checks to manage risk.
For borrowers, the trend highlights the importance of careful borrowing, as higher loan amounts and multiple accounts can increase the chances of default.
Gold loans remain a key part of India’s retail credit market, but the latest trends suggest that the rapid growth needs to be watched closely.
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