India’s households possess around 30,000 tonnes of gold holdings, which places them among the largest owners of gold in the world. However, the majority of the holdings have been economically inactive assets, stored either in bank locker facilities or household safes.
There are some signs of that changing. There is now an emerging recognition in India that gold holdings can not only be cultural possessions or inheritance assets but also financial instruments through which one can gain liquidity, become entrepreneurs, fund emergencies, and access formal credit without necessarily letting go of their ownership.
This shift is exemplified in the organised gold lending market as well, which according to ICRA, is set to reach ₹15 lakh crore by FY2026 – about a year earlier than previously anticipated with a growth of nearly 26 per cent CAGR between FY2024 and FY2025.
From emotional ownership to economic participation
For decades now, Indians have preferred to mortgage their gold rather than selling them when faced with financial challenges because of the sentimental value associated with jewellery and ancestral possessions. This notwithstanding, consumers today are waking up to the economic value of the precious metal.
These are used by consumers for educational purposes, health care needs, capital requirements, as well as business growth.
The reason why these loans attract consumers is the quick turnaround, minimal paperwork, and easy access for people with no credit history.
It is important to note that this trend has moved beyond the confines of conventional gold loan lenders. Demand for the product has been increasing rapidly in semi-urban and tier-2 cities.
Rising gold prices are reshaping consumer behaviour
The steep increase in the price of gold has further fueled this shift. When the prices of gold go up, the value of gold used as collateral by households goes up as well, enabling the consumer to obtain loans in larger quantities using the same quantity of gold.
Rather than selling off their investments or going for loans based on credit alone, people are opting to take loans through gold financing as a viable option.
The country’s private stockpile of some 30,000 tonnes of gold translates into a huge amount of idle wealth that can be put to good use through gold financing.
Policy changes and regulatory attention are formalising the sector
Policy trends are also influencing consumer and industry behavior. Increased import duty rates, regulations for gold import and discussions about lower non-essential gold consumption have been motivating individuals to make better use of existing assets, instead of acquiring new jewellery repeatedly.
On the other hand, policy-makers are increasingly focusing on the gold loan business. Changes in RBI’s attitude toward lending, Loan to Value (LTV) rates and risk management point toward the importance being placed on the sector.
Increased regulations and standardisation will help build consumers’ trust and accelerate the move to formal sources of lending. Realizing this potential, public sector banks, NBFCs, fintech lenders, and specialised gold finance companies have expanded into the gold loan business.
Gold’s future in India will be defined by utility
India’s love for gold will remain unchanged in the years ahead. Gold ownership through weddings, festivals, and cultural practices will continue in future. What will change is the nature of its use in personal finance.
India’s next generation of gold economics will depend not just on how much gold is owned but also on how efficiently that gold can be used to generate liquidity, fund ambitions, and secure financial health.
For the finance industry, there lies an exciting opportunity to create an open gold financing ecosystem based on transparency, technology, and customer experience.
Gold’s purpose in India is shifting from emotional protection to financial leverage. No longer is the discussion about whether Indians will continue owning gold; rather, how well they can leverage that gold in India’s journey towards economic success.
The author is Director at Arvog