For generations, gold in Indian homes has been more than jewellery. It has been a wedding gift, a family heirloom and, often, a financial safety net. Now, that : raising a loan.
The latest RBI data shows just how strong the appetite for loans has become. Gold-backed lending by NBFCs (non-banking financial corporations) surged nearly 70% year-on-year in June 2026, far outpacing the 20.3% growth in overall retail credit. The surge has come despite the RBI tightening rules governing gold-backed loans.
So, what is behind India’s growing appetite for gold loans?
One reason is that
Gold loans were once largely associated with financial emergencies — an unexpected medical bill, a cash crunch or a sudden need for money. That perception is changing.
“Earlier, borrowers availed gold loans only as an emergency funding option. However, today, borrowers view gold loans not only as an emergency measure but also as an asset for planned expenses,” says Puja Abhishek Singh, CEO, Manipal Fintech.
She says that borrowers are increasingly using these loans to manage working capital, pay for education and meet other immediate liquidity needs.
That makes gold an unusual financial asset. It can sit quietly in a locker for years, but when cash is needed, it can quickly be turned into credit without having to sell the jewellery.
For many borrowers, particularly self-employed people and those with limited credit histories, the attraction is simple: the loan is backed by an asset they already own.
Unlike an unsecured personal loan, the lender has gold as collateral. This can make access to formal credit easier for some borrowers.
“Borrowers are increasingly considering gold loans alongside personal loans, credit cards, and other unsecured credit,” Singh says.
The process has also become faster. Digital onboarding, quicker approvals and relatively limited documentation have made gold loans more accessible, particularly as organised lenders expand their reach, she says.
There is, of course, an obvious factor behind the growth: gold prices have risen sharply.
When the value of jewellery increases, the amount a borrower can potentially raise against the same gold also rises. This can make a gold loan more attractive to households that already own the metal.
But the near-70% growth in NBFC gold loans suggests that price appreciation is not the only factor at work.
Singh says that the increase is being driven by both new and existing borrowers. New customers are being attracted by the convenience of gold loans, while existing borrowers are taking larger loans or renewing their loans as the value of their gold has increased.
The changing use of gold loans may be one of the biggest shifts in the market.
Instead of keeping gold strictly as a rainy-day asset, households are increasingly using it to fund business expansion, working capital, education and healthcare.
“Today, that perception is evolving, with borrowers increasingly recognising gold loans as a convenient and flexible source of planned finance,” Singh says.
This also means gold-backed lending is becoming part of everyday financial planning for some borrowers, rather than being used only when there is nowhere else to turn.
The gold-loan story is not limited to India’s big cities.
NBFCs and other organised lenders are expanding their branch networks and digital services across smaller towns, semi-urban areas and rural markets. This matters because Indian households outside the major metros hold a significant amount of physical gold.
“There is enormous opportunity in this region, where many families have gold that can be utilised to get credit from formal institutions,” Singh says.
As organised lenders make the process quicker and easier, more borrowers could move away from informal sources of credit towards regulated gold loans.
The rapid growth in gold-backed borrowing naturally raises a question: are Indians borrowing against jewellery because they are struggling financially?
Singh does not see it simply that way.
She believes the growth increasingly reflects greater acceptance, digitisation and accessibility of formal gold-backed credit, rather than just financial distress.
The organised gold-loan market is also expanding rapidly. ICRA (Investment Information and Credit Rating Agency) estimates that the organised gold-loan market reached around Rs 15 trillion in FY26, while RBI data shows the sharp rise in NBFC gold lending, Singh says.
The growing presence of banks, NBFCs and fintech companies is also giving borrowers more options than traditional moneylenders.
That is the big question.
If gold prices stabilise or fall, the value of collateral available to borrowers will no longer get the same boost. But Singh does not expect the market’s future to depend only on gold prices.
She expects greater penetration in rural and semi-urban India, financial inclusion and wider adoption of ‘phygital’ lending models to support growth over the next 12-18 months.
In other words, the next phase may be less about how expensive gold becomes and more about how easily households can turn the gold already sitting in their lockers into formal credit.
For a country where gold has long been associated with security and savings, that could mark a significant change: Indians are no longer just buying gold for a rainy day. Increasingly, they are borrowing against it.