Gold Loans Lead India’s Retail Credit Market: Report

Gold loans have emerged as the dominant segment in India’s retail credit market, contributing **36% of total loan volumes and nearly 40% by value**, according to a report by TransUnion CIBIL.

The growth is largely driven by rising gold prices and a growing preference among consumers for secured borrowing. As gold values increase, borrowers are able to access higher loan amounts against their holdings, making gold loans an increasingly attractive option.

A key trend highlighted in the report is the rise in average ticket size, which has reached approximately ?1.9 lakh in the December 2025 quarter. This reflects both higher gold valuations and increased borrowing demand.

The report also indicates an improvement in overall credit conditions. The Consumer Market Indicator (CMI), a key measure of credit market health, rose to 102 in the December 2025 quarter, up from 97 a year ago. This marks the third consecutive quarter of growth.

Gold loans are no longer limited to their traditional stronghold in southern India. Faster growth is now being seen in northern and western states such as Uttar Pradesh, Madhya Pradesh, and Rajasthan, pointing to wider adoption across regions.

The borrower profile is also evolving. More than half of gold loan borrowers now fall under the prime and above categories, suggesting that gold loans are increasingly being viewed as a mainstream financial product rather than a last-resort option.

Demand remains particularly strong in semi-urban and rural areas, which account for 54% of the total borrower base—up three percentage points year-on-year. Additionally, the share of new-to-credit consumers has increased to 15%, indicating broader financial inclusion.

While there has been some moderation in credit supply following the festive season, the report notes that this is a seasonal trend rather than a sign of slowdown. Meanwhile, the auto loan segment has remained stable, supported by demand in the affordable mid-segment.

Overall, the findings highlight the growing importance of gold loans in India’s credit ecosystem, supported by strong demand, rising asset values, and expanding reach across regions and customer segments.

With inputs from IANS